A proposal to permit a company to trade electricity has raised eyebrows of those in the government as well as the private sector. As per a proposal tabled at the Ministry of Finance by Nepal Infrastructure Bank Ltd (NIFRA), Vishal Group aims to control electricity trading worth billions of rupees through the proposed company, according to a news report by ekagaj.com last week.
Nepal Electricity Authority’s (NEA) annual electricity trading was worth over Rs 76 billion last year, and this permission may allow the new company to cash in on trading surplus electricity in Indian markets, says the story. If the proposal gets through, the group will get the business without competition.
The bank chairman is Anuj Agrawal, who is also the director of Vishal Group, with the business group owning a big stake in the bank directly or indirectly.
The bank, with Rs 20 billion rupees in paid capital, is a public private partnership institution, in which the government owns 10 percent. Its primary objective is to finance mega infrastructure projects but its current move is a deviation from its basic role. Bank Chairman Agrawal is thought of as close to PM KP Oli and has tried to get into the license of buying and selling electricity. The proposal may be tabled at the cabinet after the opinion of the Ministry of Finance.
On the other hand, a government-owned Nepal Power Exchange Limited’s proposal for electricity trading is gathering dust due to lack of law to license electricity trading for new companies. A new electricity bill with the provision of giving license for electricity trading awaits parliament’s approval.
According to the news report, the business group has a hidden agenda of exploiting NEA’s robust transmission lines.
The bank has not disclosed the new company’s proposed share structure. It has also denied that the trading company will be owned by certain groups but says it will rather be a mix of the government, NEA, commercial banks, financial institutions and general shareholders owing it.
The bank has also stated that this trading company will pave the way for the entry of the private sector in cross-border electricity lines.
Meanwhile, former NEA managing director Kulman Ghising, who ended the country’s acute load-shedding in 2016, has said electricity trading, a strategic service, should not be given to a private company.
Ghising said the government’s own company should be given priority for trading electricity. In response to the proposal of a new trading company, the trade union at NEA has warned of protests if this new company is allowed to trade electricity.
This is not the first time the current government has favored this company. Last year, Finance Minister Yubaraj Khatiwada had leaked tax rates on electricity vehicles to the Vishal Group, secretly giving it time to import electrical vehicles at cheaper tax rates before making public tax rates. The group also was favored with lower tax rates on import of chocolates.