“The government has a major role to play to resolve the issue at a time when NEA and industrialists are at loggerheads.”

  8 min 51 sec to read
 “The government has a major role to play to resolve the issue at a time when NEA and industrialists are at loggerheads.”

The electricity tariff dispute over dedicated feeders and trunk lines has dragged on for a long time. It was expected that a concrete decision would be taken to resolve the issue as soon as the appointment of the new energy minister was done. However, it has not happened and the Nepal Electricity Authority (NEA), the government-owned power utility, is looking to raise the tariff. At the same time, industrialists are adamant that they will not to pay the arrears. NEA claims that arrears have totaled about Rs 15 billion including fines, additional charges and interest.

Pashupati Murarka, former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) says that the facts do not reflect NEA’s claims. According to him, forcing industrialists to pay the electricity bills will be discouraging at a time when they are running their businesses facing the Covid-19 pandemic and other various challenges. In an interview with Bijay Damase and Milan Bishwokarma of New Business Age, Murarka talked about the best way forward to resolve the dispute. Excerpts:

How is the dispute related to dedicated feeders and trunk lines affecting the industrial sector?
First it should be understood how this controversy started. In July 2015, NEA had decided to supply electricity to the interested industries through dedicated feeders and trunk lines by adding a premium of 65 percent to the general tariff. In the case of trunk lines, NEA had maintained the guideline that industries receiving at least 20 hours of electricity during loadshedding hours of a minimum of six hours a day were required to pay the premium charges. NEA would have been able to collect the premium only if that condition was met. However, at that time, NEA did not have the authority to fix the electricity tariff and the tariff was instead approved by the then Electricity Tariff Fixation Commission (now Electricity Regulatory Commission) on January 13, 2016.

The Commission on January 26 issued a media notice to announce tariffs on electricity through dedicated feeders and trunk lines. At that time, the Commission directed NEA not to collect the premium for the period from the date of fixing the tariff till the approval from the Commission. The body also directed NEA to refund the premium amount to the industries if such an amount was charged.

However, NEA invoiced the industries after three years for overdue payments charging the premium amount for that period as well.

More than 200 industries have paid their bills at premium rates for using electricity through dedicated feeders and trunk lines. Nevertheless, NEA invoiced 55-56 industries that had not consumed electricity at that supply rate. This is the main reason why this controversy started.

After the official announcement on May 2018 that Nepal had become ‘loadshedding’ free, there was no reason to supply electricity through dedicated feeders and trunk lines separately to industries. Since then, all industries are supplied with electricity through normal feeders. However, NEA still asked industries to pay their bills from May 2018 to July 2020 charging the premium amount. Over the past year, industries have not been charged the premium rate as the Electricity Regulatory Commission has scrapped the electricity tariff for dedicated feeders and trunk lines.

There is no question about needing to pay for the electricity consumed for the period before the tariff rate was fixed by the commission and after the end of the loadshedding. Industries have already cleared their bills for the period after the tariff rate was fixed and the official announcement of the end of loadshedding.

It is totally unjust to ask people to pay for what they haven’t consumed. We are ready to pay the bills only if NEA can prove that it supplied electricity to the industries at the premium rate.

Time of Day (ToD) metres have been installed in all industries. Records related to the supply of power to customers can be easily obtained from such metres. We request NEA to extract data from the ToD metres and take the necessary decision based on that.

Had the invoicing been done on a monthly basis, such a problem could have been avoided. Industrialists who did not want to get electricity through dedicated feeders and trunk lines could have talked to NEA in order to make a decision.

Also, another related issue is yet to be discussed and debated. The then Electricity Tariff Fixation Commission set the electricity tariff rate on January 26, 2015. However, a month later, on February 23, NEA published a notice in Gorkhapatra stating that it had suspended the supply of electricity to industries through dedicated feeders and trunk lines until further notice due to power shortage. The authority has not yet published any notice about the resumption of the electricity supply to the industries through dedicated feeders and trunk lines. This proves NEA has not supplied electricity to the industries through dedicated feeders and trunk lines.

But didn’t the industries consume electricity through dedicated feeders and trunk lines during loadshedding?
Those who have consumed the electricity have already cleared their dues. We also faced power shortages during the period of loadshedding and operated factories by running diesel generators. Factories consumed electricity according to the power cut schedule of that time.

How do you take the accusations made by NEA regarding the non-payment of the electricity bills?
We never have had any problems clearing our normal dues on a monthly basis. But as the dispute dragged on, industrialists were discredited and defamed socially. If this had happened in other countries, business owners would have demanded compensation for this mistreatment. It is insulting when there are false media reports that claim industrialists have failed to clear large overdue amounts. We are questioned on social media and even our family members face similar questions when they go out in public.

It is likely that some industries may have consumed electricity supplied through dedicated feeders and trunk lines before the tariff rate was approved by the commission. Don’t you think industrialists have a moral obligation to pay their dues for the period of mid-June 2015 to mid-January 2016 even if NEA did not have the authority to fix electricity tariffs?
That is a technical matter and I don’t have anything to say about it. But what is clear is NEA does not have the authority to fix the electricity tariff rates. The decision of ERC needs to be implemented in this respect. The tariff rate with premium before the ERC’s approval is not legal. This shows the weakness of NEA. Issuing electricity bills that include premium rate charges for that period is equivalent to black market practices.

In its verdict on a writ filed by Shivam Cement against NEA regarding the payment of electricity bills, the Supreme Court said that the tariff with premium will not be applicable from mid-June 2015 to mid-January 2016. While industrialists are citing the court’s decision, NEA has argued that the decision is only for Shivam Cement. What do you say about this?
This is an important decision by the Supreme Court which applies to the entire industrial sector and NEA cannot say that it is applicable only for Shivam Cement. This decision of the court should be taken as a precedent.

How do you think this dispute should be settled now?
We need to move ahead according to the decision of the Commission for Investigation of Abuse of Authority (CIAA). A year ago, CIAA said that the electricity tariff should be collected by ascertaining the amount of electricity consumption undertaken by the industries. The verdict of the Supreme Court should be applicable for all industries that have consumed electricity supplied to them though dedicated feeders and trunk lines. Data should be extracted from ToD metres to find out the exact amount of electricity consumption by the industries.

Neither the government or anyone else is allowed to raise money in the wrong way. What would have happened in this case if NEA was a private entity? It would have faced public outrage and its officials would have faced jail time. No one can can be charged for goods and services they did not receive. So, the invoicing to the industries was done in bad faith. The fact that NEA, as of yet, has not said anything about the resumption of electricity supply after it published a notice on the suspension of power supply through dedicated feeders and trunk lines on February 23, 2015 indicates this.

Has there been any initiatives from NEA to resolve the problem?
For many years, NEA did not hold any discussions with us to resolve this dispute. A few weeks ago, high officials of the authority called in industrialists and listened to their concerns. However, further discussions have not taken place after the change in NEA leadership.

What do you think will happen if a situation arises where industries have to pay the dues anyhow?
Such a situation will be unfortunate for the country’s industrial sector. 55-56 companies have been unnecessarily dragged into this controversy. The amount charged in the electricity bills of some companies exceeds their paid-up capital. On top of that, the arrears are increasing every month due to fines. Some industrialists have filed cases against NEA in the district courts. With the cases pending in court, fines will continue to add up to the amount mentioned in the invoices till the court decisions are reached. If the courts decide in our favour and NEA chooses to repeal the decisions, the issue will get complicated further. Industries will collapse financially if they are forced to pay the due amount as asked by NEA.

Why hasn’t the government paid attention to this dispute in order to resolve it?
I think it is because of the fear prevailing among the people in the government and bureaucracy that they will be accused of taking bribes from the industrialists if they make an attempt to settle the dispute. The government has a major role to play to resolve the issue at a time when NEA and industrialists are at loggerheads. This dispute should not be prolonged unnecessarily. 

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