With Prime Minister Pushpa Kamal Dahal’s intervention, the issue of dedicated feeders has been resolved at least for now. The issue resurfaced when, on Aug 17, the Nepal Electricity Authority (NEA) warned industrial and commercial customers that their power connections would be disconnected unless they settled their outstanding payments within a 15-day period.
The delegation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) led by its President Chandra Prasad Dhakal met the Prime Minister on Monday. During the meeting, the FNCCI delegation briefed the Prime Minister that the decision to cut off electricity when the economy is in trouble due to economic recession will bring more crises.
Following a request from the FNCCI, Prime Minister Dahal contacted Kulman Ghising, the managing director of the authority, and directed him to halt ongoing proceedings. The Prime Minister assured the FNCCI team that the decision to cut off electricity by the NEA will not be implemented for now. “The government will address the issue in coordination and consultation and a study about it is underway,” said Dahal.
Given that businesses are currently operating at less than 40 percent capacity due to the ongoing economic crisis, the FNCCI suggested that specific actions are needed to safeguard industrial enterprises. FNCCI President Dhakal remarked that the NEA's actions were unjustifiable given the current state of the private sector. “At this juncture, what we require is assistance and encouragement—let’s not compound our challenges,” he said. After the fresh notice by the NEA to settle the outstanding payments, the FNCCI convened the meeting of its ‘standing committee’ on Sunday, in which industrialists from the Bhairahawa Industrial Corridor were also present. The majority of industries that are yet to settle their dues to NEA belong to the cement and steel industries. On Monday, cement and steel industrialists also accompanied FNCCI President Dhakal to meet the Prime Minister.
While payment disputes between the NEA and the private sector have been lingering for years, the NEA issued a fresh notice after lawmakers raised the issues at the parliament demanding the suspension of its Managing Director Kulman Ghising for failure to recover the outstanding bills. The row between the NEA and industrialists over outstanding electricity bills has been dragging on for years. The state-owned utility maintains that 62 industries owe more than Rs 19.95bn for electricity supplied to them through dedicated feeders and trunk lines since 2015.
When the country was experiencing an extreme power crisis, a board meeting of the NEA, in June 2015 set premium charges for factories using electricity through dedicated feeders from August of that year. A separate meeting of the now-dissolved Electricity Tariff Fixation Commission had decided in Jan 2016 to set premium charges for factories using direct electricity from dedicated feeders and trunk lines. The dispute intensified after May 2020, after the power utility presented bills to the factories for overdue payments.
In the second week of Aug 2020, a cabinet meeting even waived the premium charge for eight and a half months of the total dues in order to minimize excess financial burden on the industrialists. With the decision, the industrialists were supposed to settle the dues of only 28 months and 11 days. However, the industrialists have been arguing that it was not appropriate for the NEA to levy additional fees even after the power utility announced the end of load-shedding in 2016.
In April 2021, the Parliamentary Public Accounts Committee (PAC) had directed the government to recover the dues from the industries that used electricity supplied through dedicated feeders and trunk lines after NEA failed to take action against them. The industries had filed 51 writs in various courts against the NEA over the dedicated feeder issue. While the courts dismissed 49 of these petitions, interim orders were issued for the remaining two cases involving Shivam and Maruti Cement. In the rulings favoring these two companies, it was stipulated that power supply should not be disconnected. Since the court scrapped 49 out of 51 writs, the NEA has been emboldened to pursue the collection of outstanding dues.
