Private sector opposes tariff hike in electricity

Published On: July 5, 2016 02:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 5: Country's private sector has opposed the electricity tariff hike decision, saying that it would erode competitiveness of Nepali industries.

Talking to Republica, Gyanendra Lal Pradhan, a private sector representative in the Electricity Tariff Fixation Commission (ETFC), said Nepal Electricity Authority (NEA) has implemented nothing that it pledged while increasing power tariff four years ago.

“Tariff hike might look justifiable. But it would neither improve power supply, nor bring about reforms in the power utility,” added Pradhan.

ETFC hiked electricity tariff by an average of 19 percent on June 30. The new tariff will come into effect from mid-September.

Padhan did not attend the meeting.

ETFC had hiked electricity tariff by 20 percent in 2012. At that time, the government had written of NEA's accumulated loss worth around Rs 28 billion. But NEA's accumulated loss has come almost to the same level in the past four years. NEA had pledged to implement various reform measures, including reducing system loss, when tariff was hiked in 2012.

“But nothing was done in this direction,” Padhan added.

NEA has system loss of about 25 percent. Butwal Power Company (BPC), which distributes electricity in several places in the western region, has system loss of only about 17 percent.

Pradhan urged NEA to change its approach of buying expensive electricity from India but not signing power purchase agreement (PPA) with domestic hydropower developers.

Confederation of Nepalese Industries (CNI) has also said that hike is electricity tariff puts more pressure on country's economy as it increases cost of production and degrades competitive strength of domestic industries. Issuing a statement on Monday, CNI said that this will be another constraint in the economy affected by weak infrastructure and political instability.

Similarly, Pashupati Murarka, president of Federation of Nepalese Chamber of Commerce and Industry (FNCCI), said programs to end power cuts should be implemented hand in hand while enforcing new tariff. He also said that expensive energy was sure to further erode competitive strength of Nepali industries.

 New tariff is consumer friendly: ETFC chair

Chairman of ETFC Jagat Kumar Bhusal has said that new electricity tariff is consumer friendly as consumers will now have to pay only for electricity consumed by them.

The new tariff regime has eliminated monthly charge and introduced 'pay as you consume' system. As per the existing tariff structure, a household consumer has been paying a minimum of Rs 80 even though s/he is consuming less than 20 units. Once the new tariff comes into effect, consumers will have to pay a minimum of Rs 30 as service charge plus Rs 3 for every unit consumed.

“The new tariff system will end the existing trend of earning income without providing electricity," said Bhusal.

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