Rising expenses put pressure on NEA's profit

Biznomy

Rising expenses put pressure on NEA’s profit

The Annapurna Express

2023/03/162 mins read

Rising expenses put pressure on NEA’s profit

As the expenses surged, the profit of Nepal Electricity Authority (NEA) has declined by around 10 percent in the first half of the current fiscal year 2022/23. The state-owned power utility has posted a profit of Rs 10.91 billion (before tax) in the review period.

NEA had logged profit of Rs 12.12 billion during the same period of FY 2021/22. The authority’s net profit in the last fiscal year was Rs 16.16 billion. The power utility’s net profit had increased by a whopping 157.73 percent in the last fiscal year.

Despite the decline in profit, NEA’s operating income has surged by 22 percent in this fiscal year. The authority earned an income of Rs 58.57 billion till mid-January, 2023 from Rs 47.97 billion in the same period of last year.

Data shows NEA’s expenses jumped by 33 percent in the first half of the current fiscal year to Rs 47.65 billion from Rs 35.85 billion in the corresponding period of the last fiscal year.

According to NEA officials, the increase in expenses are attributed to rise in the import of electricity from India as well as investments in various hydropower projects.

Due to the prolonged dry season and decrease in water levels in the rivers, NEA has been importing more electricity from the southern neighbor this year. The dry season runs from December to April while the wet season lasts from May to November. According to NEA, the run-of-the-river type hydropower projects produce less than 40 percent of their installed capacity during the dry season.

In the meantime, NEA has also invested Rs 15.22 billion in shares and loans in various hydropower projects and rural electrification projects.

NEA Deputy Managing Director Pradip Kumar Thike said that the authority’s profit generally contracts during the first half of the fiscal year. “The actual picture of the NEA’s profit will be visible by the end of the fiscal year,” he said.

In spite of the decline in profit, business prospects are bright for NEA as the Nepal-India power trade is in the favor of Nepal. NEA’s statistics show an earning of Rs 4.53 billion from the power trade in the first six months of the current fiscal year. The power utility exported electricity worth Rs 8.43 billion to India while the power import stood at Rs 3.90 billion.

Similarly NEA said it purchased electricity worth Rs 22.85 billion in the first half of this fiscal from independent power producers (IPPs).