NEA Preparing to Classify Hotels as Industrial Consumers

The Nepal Electricity Authority (NEA) is preparing to restructure its customer classification system to address the long-standing demand of hotel entrepreneurs to be treated on par with manufacturing industries.

Currently listed under the commercial customer category, hotels may soon be reclassified under the industrial category. The NEA board has decided to place hotels in the industrial customer group and has forwarded a proposal related to the change in customer classification to the Electricity Regulatory Commission (ERC) for approval, NEA Deputy Director Sadhav Bhandari told New Business Age.

Hotels would benefit from lower electricity tariffs if included in the industrial category. According to the NEA, the per-unit tariff for electricity supplied through a 33 kV line is Rs 8.40 for industrial customers and Rs 10.80 for commercial customers.

The proposal also includes making limited adjustments to certain agriculture-related businesses.

ERC Chairperson Dr Ram Prasad Dhital confirmed that the commission has received the proposal for approval. However, he said the decision-making process will not proceed until the financial impact of the reclassification on the NEA’s annual revenue becomes clear.

“We have written to the NEA seeking concrete details on how the change in classification would affect its annual income and tariff structure,” Dhital said.

According to him, the NEA has been asked to present a clear framework specifying which customer groups are proposed to be shifted to which new categories.

“The NEA has requested to move certain consumer groups from one category to another. In particular, it has proposed shifting hotels from the current commercial category to the industrial category,” he said. “There is also a proposal to place some service sectors such as community irrigation and community drinking water systems under different categories.”

Dhital said any reclassification must clearly show how it would affect the NEA’s annual revenue. “If the impact on annual income is negligible, the decision will be easier. However, if there is a significant drop in revenue, a clear strategy will be required on how to manage it,” he added.

He noted that hotels currently face relatively higher electricity tariffs under the commercial category. If reclassified as industrial consumers, tariffs are likely to decrease, making it essential to study the overall impact on the NEA’s total revenue before approving the proposal.