NEA’s profits fall by 37% amid growing expenses, foreign exchange losses

Kathmandu, Aug. 18: The Nepal Electricity Authority (NEA) has reported a significant drop in its profit for the fiscal year 2024/25, primarily due to declining electricity export rates, increasing administrative costs and losses from foreign exchange fluctuations.

As per the NEA's financial report, it recorded a profit of Rs. 9.06 billion before tax deduction in the last fiscal year 2024/25. This is almost 37.32 per cent lower than the profit before tax of the previous fiscal year 2023/24.

The NEA had made a profit of Rs. 14.46 billion during the previous fiscal year 2023/24. However, it had recorded a net profit of Rs. 10.53 billion in the fiscal year 2023/24. 

Addressing NEA’s 40th anniversary event, Managing Director Hitendra Dev Shakya attributed the decline in profit to multiple factors, including a drop in the electricity selling rate in the Indian market, rising administrative expenditures, and foreign exchange losses—particularly due to the appreciation of the Japanese yen. 

The authority suffered losses worth approximately Rs. 2.5 billion from currency fluctuations alone, he said.

Despite the fall in profits, the NEA reported an 8.46 per cent increase in revenue from electricity sales, earning Rs. 125.27 billion in FY 2024/25. This includes Rs. 17.47 billion from electricity exports. 

The Authority’s total income, including other sources, reached Rs. 138.87 billion for the year.

In the fiscal year 2024/25, the total operating expenses of the Authority increased by 10.15 per cent compared to the previous fiscal year and reached Rs. 97.787 billion.

In the meantime, the expenditure on electricity purchase alone increased by 11.73 per cent and reached Rs. 77.10 billion in last fiscal year as compared to 2023/24.

The main expenses included Rs. 2.07 billion for generation, Rs. 3.24 billion for transmission, Rs. 12.22 billion for distribution and Rs. 1.84 billion for royalty.

In addition to these expenses, the total expenses for the fiscal year 2024/25, including interest expenses, depreciation expenses, and foreign exchange losses, are Rs. 129.81 billion, said Shakya.

The total assets of the Authority have increased by 6.2 per cent to Rs. 684.91 billion in the last fiscal year 2024/25.

434 MW electricity added 

According to NEA, the installed capacity of hydropower reached 3,591 MW by the end of last fiscal year.

Similarly, a total of 434 MW of electricity was added to the NEA system in the fiscal year 2024/25. Of this, the contribution of the NEA's subsidiaries is 153.5 MW, while the contribution of the private sector is 280.5 MW.

Among the subsidiary companies of NEA, 111 MW from Rasuwagadhi Hydropower Company and 42.5 MW from Sanjen Hydropower Company have been added.

The construction of the 102 MW capacity Madhya Bhotekoshi Hydropower Project under construction by Madhya Bhotekoshi Hydropower Company has been completed and testing has reached the final stage. 

Projects under various stages of construction by other subsidiaries include Rahughat (40 MW), Tanahun (140 MW), Trishuli 3B (37 MW), Rolwaling (22 MW), Tamakoshi V (99.8 MW), Upper Modi A (42 MW), and Upper Modi (18.2 MW).

In the fiscal year 2024/25, a total of 253 circuit kilometres of transmission lines were added to the NEA's system, bringing the total length of transmission lines to 6,760 circuit kilometres.

Similarly, 2,034 circuit kilometres of transmission lines are under construction, said Shakya.

Transmission substation capacity increased by 1,073 MVA in the last fiscal year, reaching a total of 14,123 MVA, while substations with a capacity of 6,338.50 MVA are under construction.

Electricity consumption up by 10%

Shakya said that domestic electricity consumption increased by 10.7 per cent in the last fiscal year as compared to the previous fiscal year, reaching 11,319 gigawatt hours.

In the fiscal year 2024/25, the number of customers of the Authority increased by 4.6 per cent compared to the previous year to reach 5.71 million.

In addition, there are about 470,000 customers receiving services through community rural electrification.

Of the total number of customers, the share of domestic customers is 91.08 per cent, the share of industrial customers is 1.23 per cent and the share of other customers is 7.69 per cent.

The national grid access has reached about 98 per cent and the annual per capita electricity consumption has increased from 420 units to 465 units.

The electricity leakage has decreased by 0.47 per cent to 12.26 per cent in the fiscal year 224/25. 

The average electricity sale of the Authority has increased from 1,873 units per customer to 1,978 units per customer in the fiscal year.

Shakya said that work will be carried forward with the goal of providing safe, reliable and quality electricity services by developing electricity infrastructure, strengthening customer service, enhancing institutional work efficiency, and expanding digital technology.

He said that the process of installing smart meters in 400,000 households in the Kathmandu Valley will begin next year and quality electricity supply will be provided across the country.

"Work will be taken forward after conducting a detailed study of the pumped storage projects (100 MW Kulekhani-Sisneri, 334 MW Syaarpu Tal, and 495 MW Hulingtar and battery storage projects deemed necessary from the perspective of energy security and daily demand management," he said.

He said that the Bahrabise-Kathmandu and Hetauda-Dhalkebar 400 kV transmission lines will be completed and put into operation within the current fiscal year. 

The New Butwal-Lamahi 400 kV, Tingla-Dudhkoshi-Dhalkebar 400 kV, Arun Hub-Inaruwa 400 kV, New Khimti-Dhalkebar 400 kV and Lapsiphedi-Tinpiple 220 kV transmission line projects will be taken forward, he added.

NEA should be able to supply 24-hour safe, reliable electricity: Minister Khadka

On the occasion, Minister for Energy, Water Resources and Irrigation Dipak Khadka stressed the need to transform the NEA into an organisation that can provide 24-hour uninterrupted, safe and reliable electricity supply, saying that energy and electricity are as indispensable as oxygen.

He said that although significant achievements have been made in electricity generation in collaboration with the private sector in the past years, there is still much room for improvement.

“We are one step ahead of the citizens, so it is not enough to simply fulfill our obligations, we must work in an inspiring manner with a sense of duty,” he said.

He said that safe, qualitative and reliable electricity flow is the main need of the day and directed the NEA to reduce electricity leakage through the use of smart technology. 

He also clarified that the private sector has been actively involved in the construction of transmission lines along with electricity generation and will also be involved in electricity sales in the coming days.

Minister Khadka spoke about the plan to improve the financial condition of the poor and disadvantaged people and communities by providing shares of hydropower without collateral.

He directed to immediately collect the arrears of dedicated and trunk lines that have not been collected for a long time.

He said, "The money for the electricity used should be collected in installments. Not to delay the work of collecting the arrears under any pretext."

Member of National Planning Commission Prof. Dr. R.P. Bichha said that the NEA should focus on regular supply of electricity.

"The regular supply of electricity is a must to increase domestic consumption. So, the NEA and its management should pay attention to provide regular supply," he said. 

Mohan Kumar Dangi, Senior Vice President of Independent Power Producers Association, Nepal (IPPAN), urged the Nepal Electricity Authority not to show bravery by creating obstacles for the private sector.

"At a time when the NEA and IPPAN have a golden opportunity to create history by taking the country on the path of prosperity, the Authority, as the sole electricity buyer and distributor, should focus on increasing production, consumption and export," he said.

"But ironically, the NEA''s focus seems to be on how to stop electricity generation, how to do PPAs, how not to extend the RCOD deadline, how not to purchase the electricity generated, how to maintain contingency and overall how to show bravery by discouraging energy entrepreneurs. This thinking needs to change," he said.

At the ceremony, 15 of the Authority's best employees were honoured with cash prizes, while offices that performed best were also awarded.