Submit your Article

The Nepal Stock Exchange (NEPSE) gained 9.25 points to close at 2,086.84 points on Wednesday.

Similarly, the sensitive index surged by 1.56 points to close at 398. 28 points.

A total of 9,361,786-unit shares of 269 companies were traded for Rs 1. 81 billion.

Meanwhile, RBB Mutual Fund 1 was the top gainer today, with its price surging by 4. 14 percent.

Similarly, Prabhu Smart Fund was the top loser as its price fell by 10.00 percent.

At the end of the day, total market capitalization stood at Rs 3. 06 trillion.

With the country’s stock market going through a bearish run throughout the last fiscal year, the government income from stock trading has taken a huge beating. The capital gains tax (CGT) from stock trading plunged by a whopping 71.3 percent in FY 2022/23. 

In fact, CGT collection has declined for the second straight year. After collecting a record-high capital gains tax in FY 2020/21, the government income from stock trading has been on the decline in the last two fiscal years. 

According to the CDS and Clearing Limited (CDSC) which keeps the consolidated data of the revenue from the stock market, the government collected only Rs 2.97bn as capital gains tax in FY 2022/23. The CGT in FY 2021/22 stood at Rs 10.35bn. The capital gains tax collection from the stock market had reached an all-time high of Rs 14.13bn in FY 2020/21. 

With the stock market on a bull run, tax collection from the capital market had surged exponentially in FY 2020/21. The domestic bourse has taken a huge surge from last year July when lockdown was imposed to contain the first wave of the Covid-19 pandemic. The digitization of the capital market which allows investors to conduct stock trading from their homes also helped new investors to enter the capital market.

In FY 2022/23, the government collected CGT totaling Rs 1.32bn from long-term share trading and Rs 1.64bn from short-term share trading.

Stock analysts attribute multiple factors to the decline in CGT collection in the last two years. In FY 2021/22, the CGT fell by around 27 percent mainly due to the government’s decision to raise the taxes from the stock trading. The government had imposed a five percent CGT on income from long-term trading of shares (shares that are sold after a year of purchase) and a 7.5 percent CGT on short-term trading (shares that are sold in less than a year of purchase) in FY 2021/22. 

In addition to this, the Nepal Rastra Bank (NRB)’s decision to tighten the margin lending through the Rs 120m cap and to increase the risk-weighted average to 150 percent on margin loans also led to a downfall in the stock market in the last two years. This, along with the extended bearish run in the stock market in FY 2022/23 contributed to a decline in share trading as well as turnover in the Nepal Stock Exchange (Nepse). 

The capital gains tax received by the government mainly depends on two things—the share prices of the companies listed in Nepse and their turnover. If the share price of the company increases, the investors earn profits, as a result, the CGT received by the government also increases. Similarly, when the number of transactions is higher, tax collection is likely to increase. However, in the last fiscal year, the number of share transactions has decreased along with the stock market indicators. “The CGT collection declined in the last fiscal year as overall stock market trading went through a bearish run,” said Suresh Neupane, Spokesperson of the CDSC.

Income from share trading

Residents of Balkot area in Suryabinayak Municipality-3, Bhaktapur, were hit by a power outage that lasted for several hours on Tuesday morning. The morning routine of office workers and students were affected as a result. Many families did not have access to water because they could not use the water pump. 

When the residents tried to call ‘No Light’ service of the Nepal Electricity Authority (NEA), the line, as always, was unresponsive.  

“We could have prepared accordingly, had we been notified about the power outage,” said Roshan Dahal, a local resident. “We tried calling the ‘No Light’ number, but no one answered.” 

But NEA Spokesperson Suresh Bahadur Bhattarai claimed that the ‘No Light’ was a 24/7 service. 

“We have a human resource crunch which might have led to unresponsiveness,” he claimed.

Abrupt and frequent power cuts have become common across the country in the recent months. The NEA officials say this is primarily due to maintenance works that are currently underway in different parts of the country. 

While the power utility has issued a ‘Maintenance Shutdown Schedule’ on its website, it does not match the time of electricity outage. Moreover, the schedule only concerns Kathmandu Valley; it does not tell when the maintenance works are being carried out in other parts of the country. 

It took five hours or so for the power to restore in Balkot. The local residents did not find out why there was an outage in the first place.    

Earlier, load shedding was primarily limited to industrial areas, but from the past few months, even households are facing frequent power cuts.

According to a research report published in May 2022 by the Confederation of Nepalese Industries (CNI), 64 percent of Nepal’s industries are forced to install diesel generators due to frequent power outages. The use of generators, as per the paper, results in an average increase of 5.3 percent in the industries’ monthly operation costs.

Between 2008 and 2016, the whole country suffered from unreliable power supply, sometimes up to 16 hours a day. According to the study entitled ‘Economic costs of electricity load shedding in Nepal,’ the country lost an estimated $11bn value of its GDP in that period. 

During the load shedding period in Nepal, the NEA used to publish weekly power outage schedules and update it regularly. 

Load shedding or not?

The recent power cuts have led many people to suspect that the NEA has imposed ‘undeclared load shedding.’ 

“When there was officially announced load shedding in Nepal, the NEA used to provide the weekly schedule of power outages,” a netizen posted on Facebook. “But now, the NEA neither admits to load shedding, nor provides regular electricity, compelling people to think if the days of load shedding are back.”

The NEA officials claimed that there is no load shedding, since the country has been generating surplus electricity during the rainy season. 

As of now, the total installed capacity of hydropower plants operational in the country is 2,759 MW. However, the national peak demand is only 1,806 MW. Yet, there are regular power outages.

Delay in the construction of transmission line

The NEA officials attribute the intermittent power cuts to the delay in constructing transmission lines. The construction of Hetauda-Dhalkebar-Inaruwa 400 kV and Hetauda-Bharatpur-Bardaghat 220 kV transmission lines has been ongoing for more than a decade, significantly surpassing the initially planned completion time of three years.

The delay in the construction of these transmission lines has also hit the country’s hydropower sector.  

Representatives of Madhya Bhotekosi Jalavidyut Company Ltd have said that the project would miss the generation deadline by at least one month. 

“We have already encountered several delays owing to local obstructions and natural disasters,” said Ram Gopal Shiwakoti, the company’s CEO. 

Initially, the project had planned to complete the project by the end of 2022, which was pushed to mid-June. 

“Our revised electricity generation schedule is September. Due to the delays, the project cost has escalated by Rs 2.75bn,” added Shiwakoti.

While the project’s work is almost complete, the actual generation cannot commence until the transmission lines are completed. 

Due to the delay in constructing high-capacity transmission lines, the NEA official said, the authority is currently transmitting only around 80 MW of electricity using its old transmission system. The new lines would have supported the transmission of up to 300 MW. 

The construction of a 400 kV transmission line is essential for transmitting electricity to western Nepal from the Dhalkebar substation. The existing 132 kV transmission line in Hetauda is unable to carry sufficient electricity to supply the western region. As a result, the NEA is unable to meet the demand and purchase electricity from independent power producers.

Poor infrastructure

Mukesh Kafle, former Managing Director of the NEA, said that the delay in the construction of new transmission and distribution lines is not the only reason behind power outages. 

“The Nepal Electricity Authority needs to replace its overall system. The time has come to invest in replacing all the channels including substations and feeders,” he said.

Without the system overhaul, Kafle warned, their situation will get worse in the future.

Meanwhile, the NEA has instructed the Independent Power Producers (IPPs) to reduce their energy generation, claiming that around 170 MW of electricity from 20 hydroelectricity projects is going to waste. 

Ganesh Karki, president of Independent Power Producers’ Association Nepal (IPPAN), said that the only solution for regular electricity flow is installation of modern distribution and transmission lines. 

“The government should not leave all the work of infrastructure development to the electricity authority. It should also intervene when necessary to control the problem of power spillage,” he said.

Karki added Nepal has finally become power surplus at least in the wet months, so the time has come for the government and investors to focus on infrastructure development.

“Earlier, everyone was focused on power generation because we were way behind our producing capacity. And since infrastructure development was never our priority, we do not have a reliable distribution channel to supply electricity.”

The price of gold has dropped by Rs 600 per tola in the domestic market on Wednesday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 112, 400 per tola today. It was traded at Rs 113, 000 per tola on Tuesday.

Meanwhile, tejabi gold is being traded at Rs 111, 850 per tola. It was traded at Rs 112, 450.

Similarly, the silver is being traded at Rs 1,460 per tola today.