Nepal paying 29 percent higher tariff for electricity imports from India than its exports to southern neighbor

Published On: February 29, 2024 10:00 AM NPT By: Republica | @RepublicaNepal

The NEA paid as high as Rs 16 per unit for imported electricity in this dry season

KATHMANDU, Feb 29: Nepal Electricity Authority (NEA) paid as high as Rs 16 per unit to import electricity from India to meet the energy demand in the dry season this year.

Currently, the country’s peak domestic demand for energy stands at 1,860 MW. According to the NEA, the electricity production has dropped as low as 1,300 MW, way down from the installed capacity of over 2,800 MW, with the drop in water level in rivers.

With the onset of winter, the NEA has been importing electricity since the first week of December. At present, the state-owned power utility has been importing around 500 MW of electricity from the southern neighbor on a daily basis.

An official of the NEA said the authority is compelled to pay a higher price after India hiked the tariff rate on electricity that it supplies to Nepal. “The average rate of this season is around Rs 11.50 per unit.”

Almost every year, India has been hiking the tariff rate of its electricity exported to Nepal. The NEA paid an average of Rs 8.26 per unit on its imported electricity in the fiscal year 2020/21. It was increased to Rs 9.66 per unit in the following year, while it was again increased to Rs 10.74 per unit in the FY 2022/23.

During mid-July to mid-December of the current fiscal year, the NEA exported electricity worth Rs 13.23 billion to India. The average selling rate of exported electricity was just Rs 8.96 per unit.

The NEA often exaggerates on its electricity export to India. However, Nepal is on the losing side when it accounts for net electricity trade with India. In the last fiscal year, the NEA imported electricity worth Rs 19.44 billion against its exports of Rs Rs 10.45 billion. The electricity import this year is projected to cross Rs 20 billion.

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Nepal Electricity Authority (NEA) earned profits worth Rs 15.36 billion in the first six months of the current fiscal year. The amount was Rs 4.44 billion more compared to the profits of Rs 10.91 billion during the same period of the last FY.

Kulman Ghising, the managing director of the NEA, said the power utility was able to increase profits mainly as it succeeded in controlling electricity leakage and minimizing internal costs, along with an increase in domestic consumption and an increase in export to India.