2018/19 – 2022/23 significant challenges in the past

CORPORATE but our accomplishments in the last

DEVELOPMENT PLAN couple of years clearly demonstrates
N E PA L E L E C T R I C I T Y AU T H O R I T Y that we are committed and capable
to meet these crucial challenges.
2018/19 – 2022/23 ii NEPAL ELECTRICITY AUTHORITY
CORPORATE n Improve Nepal’s Energy Security by generating
DEVELOPMENT PLAN 100% of the electricity domestically
N E PA L E L E C T R I C I T Y AU T H O R I T Y n Reduce aggregate technical and commercial
COPYRIGHT (AT&C) losses to less than 15%
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 i n Modernize the grid to have 75% of the energy
We have earned back the trust and confidence sold billed through Smart and/or automated
of our customers by eliminating load shedding meters
across the country. We are aware that the n 2 million customers use automated or online
debilitating load shedding caused numerous payment options
hardships to our customers not to speak of n At least double employee efficiency (sales/
the significant economic and social loss to the employee)
country. At NEA we value our customers’ trust and n Increase non-tariff revenue by monetizing
take our responsibility to meet their expectations surplus energy through trade and by
seriously and are resolutely resolved to never to leveraging NEA’s assets and infrastructure to
return to the dark days of the last decade. generate new sources of revenue
The physics of electricity means that it is In addition to the three Strategic Themes, the
generated and consumed instantaneously CDP outlines the steps NEA will undertake in
but the process of delivering that electricity response to the changing political, regulatory and
is anything but instantaneous. It is a result of policy framework that governs the sector. Nepal
meticulous planning that spans multiple years. is at a historical juncture, and so is its electricity
The lack of an integrated long-term planning market. The electricity sector has evolved from
process at NEA is one of the important lessons one in which NEA was solely responsible for
we have learned from the crisis. This is why, my transmission, generation and distribution to one
team and I have developed a 5-year Corporate where there are multiple actors in each of these
Development Plan (CDP) to achieve our Vision verticals. Looking forward, NEA recognizes that
of becoming “an efficient modern utility that big systemic changes are imminent even as the
provides reliable, quality and affordable electricity timing and extent of reform is uncertain. But
to its customers while being responsive to we also understand that the constant through
Government imperatives and creating value for these changes will be the fact that NEA is more
its shareholders.” than just an electricity utility and will continue to
The CDP will provide the roadmap for NEA play a pivotal role in the evolution of the energy
to deliver on its mission of developing the sector in Nepal. NEA shoulders the responsibility
infrastructure for providing safe, reliable and of being a key agency through which the
affordable electricity to all and serve as the Government aims to achieve its policy goals for
engine that powers economic and social the energy sector including the development of
development in Nepal. The CDP highlights our a vibrant and dynamic energy sector in Nepal.
priority areas over the next five years which are NEA takes these responsibilities with the
structured around three strategic themes: gravity it merits. The CDP takes this into
Theme 1: National Priorities account and outlines a strategy that envisions
Theme 2: Capable, Modern and Smart Utility a re-organization of its corporate structure to
Theme 3: Improve Customer Care meet the new challenges and opportunities
With all the planned measures and activities that will result from these changes. While the
executed, we will achieve the following goals: need for re-organizing its corporate structure
n A power system with an installed capacity is driven by political imperatives of the new
of 5,000 MW and the transmission and form of government, there are also businessbased
distribution infrastructure to support this reasons to embark on this path towards
capacity a more efficient and responsive NEA. The
n Achieve per capita electricity consumption of corporate re-organization will be undertaken
500 kWh to extract benefits of operational efficiency
n Provide universal access to electricity through and competition while avoiding the pitfalls
on-grid and off-grid solutions of increased administrative costs, reduced
n Connect 400,000 customers annually and have economies of scale, inadequate technical and
a customer base of over six million consumers administrative capacity and market disruption.
MESSAGE FROM That is why we will proceed with caution
MANAGING DIRECTOR and through a consultative process with all
Nepal Electricity Authority stakeholders.
serves 4 million customers, who The CDP outlines and ambitious plan to
count on us every day to provide transform NEA from an “old-school” utility to
safe, reliable and affordable energy. a modern, smart and capable utility. We have
Just as important, the country looks envisioned a quantum leap in the next five years
to us to provide smart, sustainable that will see our system grow by more than four
long-term energy solutions to times the current size and more than double the
power Nepal’s economic and social per capita electricity consumption. We have a lot
development. NEA has endured to work on, but we also have a lot to work with.
If anything gives me faith that we will achieve USD United States Dollar
these goals then it is the passion, commitment VUCL Vidyut Utpadan Company Limited
and dedication of our employees. Just as we WECS Water and Energy Commission Secretariat
will be making investment in our infrastructure ACRONYMS
to modernize our system, we will be investing MESSAGE FROM MANAGING DIRECTOR i
in the development of our staff to meet these 1. MANDATE, MISSION, VISION,
new challenges. I have a strong commitment CORE VALUES AND POLICY OBJECTIVES 1
to ensuring the welfare of my most valuable 2. CURRENT STATUS OF THE POWER SECTOR 5
resource, our management and staff, and we will 3. SITUATIONAL ANALYSIS 13
do so by re-tooling and upgrading their skills to 4. STRATEGIC THEMES AND GOALS 21
meet the challenges we have ahead. 5. FINANCING THE DEVELOPMENT STRATEGIC PLAN
With the support and policy interventions of our 47
Government and people, I am confident that 6. RESTRUCTURING 53
NEA will be able to not only achieve, but even 7. STRATEGIC PLAN IMPLEMENTATION
surpass the targets and play an important role in AND MONITORING FRAMEWORK 61
the economic and social development our great 8. ACTIVITY MATRIX 65
country. CONTENTS
KUL MAN GHISING Table 1: The key legislative framework that governs the
Managing Director sector 8
NEA Table 2: White Paper, Ministry of Energy Water Resources
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 iii and Irrigation 10
AEPC Alternate Energy Promotion Center Table 3: Load Forecast 16
AIIB Asian Infrastructure Investment Bank Table 4: Energy Balance Table 16
AT&C Aggregate Technical & Commercial Losses Table 5: NEA SCOT Analysis 17
BT Build Transfer Table 6: National Priorities 22
CDP Corporate Development Plan Table 7: Generation Mix 27
DAM Day Ahead Market Table 8: Transform NEA into a Capable, Modern and Smart
DFID Department of International Development Utility 28
DoED Department of Electricity Development Table 9: Improve Customer Care 43
DSM Demand Side Management Table 10: Funding Framework 47
ERC Energy Regulatory Commission Table 11: Resource requirement 48
ETFC Electricity Tariff Fixation Commission Table 12: Total Financial Resources Required 48
FVAP Financial Viability Action Plan Table 13: Resource mobilization Plan - IRG Requirement 48
GDP Gross Domestic Product Table 14: IRG Funding Coverage Ratios 49
GTD Generation, Transmission, Distribution Table 15: Resource Requirement from Debt Providers 49
GoN Government of Nepal Table 16: Resource Requirement from GoN 49
EIB European Investment Bank Table 17: Projected Income Statement for the CDP period
FDI Foreign Direct Investment 50
GIS Geographic Information System Table 18: NEA’s total forecast revenues 51
HIDCL Hydropower Investment Table 19: IRG Cover and Consumer Tariff Scenarios 51
Development Company Limited Table 20: Key Performance Indicators for Monitoring and
ICT Information Communication System Evaluation 63
IDC Interest During Construction Figure 1: Core Values 2
INPS Integrated Nepal Power System Figure 2: Stakeholder Framework 8
IPP Independent Power Producers Figure 3: Risks 19
IRG Internal Revenue Generation Figure 4: Impacts & Likelihood 19
JICA Japanese International Cooperation Agency Figure 5: Current Electricity Market Overview 54
KPI Key Performance Indicators Figure 6: Nepal Electricity Market Overview after
MDB Multilateral Development Banks Re-structuring in the Plan Period 55
MIS Management Information System Figure 7: Market Design After Re-structuring during the Plan
MCC Millennium Challenge Corporation Period 56
MoEN Ministry of Energy Figure 8: Possible Nepal Electricity Market Overview After
MoEWRI Ministry of Energy, Water Resources and Irrigation Further Re-structuring beyond the Plan Period 58
MoF Ministry of Finance Figure 9: Market Design After Further Re-structuring
NEA Nepal Electricity Authority beyond the Plan Period 58
NFRS Nepal Financial Reporting Standards Figure 10: Restructuring Milestone Timelines 58
NORAD Norwegian Agency for Development Cooperation TABLES
NPTC Nepal Power Trading Company FIGURES
O&M Operations and Maintenance vi NEPAL ELECTRICITY AUTHORITY
PPA Power Purchase Agreement MANDATE, MISSION,
PRoR Peaking Run of River VISION, CORE VALUES
RoR Run of River AND POLICY OBJECTIVES
RoW Right of Way 1.
RPGCL Rastriya Prasaran Grid Company Limited CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 1
SPV Special Purpose Vehicle 1.1 NEA’S MANDATE
TAM Term Ahead Market Nepal Electricity Authority (NEA) came into existence
TOD Time of Day on August 16, 1985 following the consolidation
T&D Transmission & Distribution of the Department of Electricity (Ministry of Water
USAID United States Agency for International Resources), Nepal Electricity Corporation and several
Development Boards in the power sector. NEA derives its mandate
from the Nepal Electricity Authority Act 1984 (The to excel.
Act) and takes policy direction from the Government TEAMWORK
of Nepal (GoN). Realizing vision and mission
The primary objective of NEA is to generate, through collaboration.
transmit, and distribute adequate, reliable, quality, ETHICS
and affordable power by planning, constructing, & INTEGRITY
operating, and maintaining power infrastructure Building trust and
facilities. Its roles and responsibilities range from improving good
recommending policies, serving as a center of governance
excellence and developing skilled human resources FIGURE 1: Core Values
on matters relating to the power sector. The Act also 1.3 CORE VALUES
grants NEA the power to purchase electricity from The ideals by which the organization
Independent Power Producers (IPPs) and engage will strive to carry out its business and
in cross border trade while introducing commercial conduct itself are embodied in the
orientation in its services. To fulfill its mandate, NEA following core values:
can tap both domestic and foreign capital from both CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 3
government and commercial entities. 4 NEPAL ELECTRICITY AUTHORITY
1.2 VISION AND MISSION CURRENT STATUS
The political, economic and social fabric of Nepal OF THE POWER SECTOR
has undergone a massive transformation in the 2.
last four decades. Similarly, the electricity market CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 5
within and outside Nepal has also evolved since NEA 1 WECS 2017 Electricity Demand Forecast 2015-40
came into operation. To meet the aspirations of a 2 ADB 2015 Energy Outlook for Asia and the Pacific. Manila
growing nation and to address the challenges of a 3 Electrification rate in the region 2016: Bangladesh 76%,
dynamic electricity market while remaining true to India 85%, Pakistan 99%, Sri Lanka 96%
its mandate, NEA needs new tools to respond to a Source
changing socio-political, environmental and market http://data.worldbank.org/indicator/ED.ELC.ACCSS.ZS
conditions. In this context, NEA’s success is measured 2.1 ENERGY SUPPLY AND
not just by its individual achievements but also by its CONSUMPTION
role in establishing a vibrant energy market. Nepal’s energy requirements are predominantly met
NEA’s vision and mission represent the aspirations by traditional sources of energy. Biomass, in the form
of a “Prosperous Nepal and Happy Nepali.” This of firewood, agricultural waste, and animal dung, is
vision embodies NEA’s ambition to provide worldclass responsible for almost 76% of the total energy supply.
service to its customers and create value for Fossil fuels are responsible for 16% of the energy
its stakeholders - customers, government, private supply in the nation and its consumption is growing
operators. Therefore, the following articulated vision at a faster rate relative to other energy sources.
and mission statement of NEA provides a framework Electricity meets only 3% of Nepal’s total energy
and focus to achieve its institutional mandate. needs1.
VISION On the consumption side, 82% of the total energy
An efficient modern utility that provides demand is driven by the residential, commercial and
reliable, quality and affordable electricity agriculture sectors. Demand from the transport and
to its customers while being responsive to industry sector stood at 10% and 5% respectively. The
Government imperatives and creating value growth in energy demand from industry (4%) and
for its shareholders. transport (3%) are projected to increase faster than
MISSION growth in Nepal’s aggregate energy demand which
Develop infrastructure to provide electricity is expected to grow at 1.9% through 20352. These
for all by constructing, maintaining, trading macro factors in the energy demand and supply
and operating a safe, optimally engineered scenario create strong tailwinds for Nepal to meet
generation, transmission and distribution its energy requirements with electricity. Meeting
power system and build a strong relationship our energy needs with electricity is not only more
with customers by balancing service quality, efficient and cleaner but will also ensure a more
reliability and costs. secure energy future.
2 NEPAL ELECTRICITY AUTHORITY 2.2 NEA AND THE POWER
CORE VALUES SECTOR IN NEPAL
SAFETY FIRST Despite its vast hydropower potential and long
Safety of our customers history in electricity (the first hydropower plant
and employees is first was established in Nepal more than 100 years ago),
and foremost. only 3% of the country’s energy needs are met by
NATION electricity. Nepal’s electrification rate (grid and offgrid)
BUILDING of about 91% is comparable to that of other
Dedicated to power countries in the region3. As of FY 2017/18 there are
Nepal’s development. about 4 million customers across 76 districts of Nepal
CUSTOMER that NEA serves through the national grid. 93.83%
CENTRICITY of these are domestic consumers and account for
Meeting customer 43.5% of the total electricity demand of 5557.3 GW h.
needs with quality Industrial consumers account for 37.53% of the
and reliability. total electricity demand. NEA’s electricity demand
EXCELLENCE forecast, driven by industrial growth, urbanization
Passion, commitment and grid expansion is expected to increase per capita
and dedication electricity usage from 170 units/capita in 2017 to
500 units/capita by 2023. Meeting this demand will the east-west. The 285 km 400kV
require an installed capacity of about 5000 MW. Hetauda-Dhalkebar-Duhabi line is
The total installed capacity of the national grid under construction in the center and
is 1,074 MW with NEA hydro, IPP hydro and NEA east of the country. The Millennium
thermal accounting for 507.9 MW, 512.7 MW and 53.4 Challenge Corporation (MCC)
MW respectively. A decade long political insurgency supported transmission line project
and underinvestment in the generation sector will extend the 400kV line to Butwal
resulted in demand for electricity outstripping supply and all the way to the border with
6 NEPAL ELECTRICITY AUTHORITY India. Similarly, the Butwal-Attariya
resulting in years of debilitating load (400 km) 400kV line is under detail
shedding. This situation has seen a design phase and expected to be
dramatic turnaround in the last two commissioned by 2025. Furthermore,
years. Load shedding has ended in large 400kV transmission lines along the
part due to substantial reduction in mid-hill highways and multiple river
system losses, proper system and load corridors are under study.
management by NEA and completion 2. Develop high voltage cross
of the high voltage cross border border interconnections.
Dhalkebar - Muzzafarpur transmission Dhalkebar-Muzzafarpur, Nepal’s first
line enabling efficient import of power ever 400kV Nepal-India cross-border
from India transmission link is currently charged
Even though the national grid has an at 220kV voltage level and imports
installed capacity 1074 MWs, 86% of up to 240MW power from India. It is
total capacity comprises of RORs and expected to be charged at 400 kV by
PRoRs projects, and only about one December 2019 enabling trading of
third of the total installed capacity can a higher quantum between Nepal
be generated from these stations in and India. A second cross-border
the dry season. So, while load shedding interconnection with India is being
has officially ended, the seasonal developed from New Butwal (Nepal)
imbalances caused by the hydro to Gorakhpur (India). There are three
dominated system means that the other high voltage interconnections
country still imports a third of its power under study. Furthermore, the
requirements from India. On an average developers of export-oriented Arun
380 MW of this power is imported from 3 and Upper Karnali plan to build
India through the Power Exchange dedicated 400kV lines to evacuate
and other trading mechanisms. Nepal their power to India. Cross-border
is expected to be net surplus in interconnection with China is also
electricity within the next two years, gaining traction. The Galchi (Nepal)
but the seasonal and diurnal system to Kerung (China) line is in study
imbalances means trading of power phase and discussions are already
with our neighbors will continue to be underway on the financing modality.
an essential part of our power narrative. While NEA has been
As the sole buyer of electricity in the sole institution
the sector, and a monopoly over responsible for the
transmission, system operation and planning, development
distribution functions means that and management of the
NEA occupies a central and dominant transmission system, the
position in the electricity sector. establishment of the
GENERATION Rastriya Prasaran Grid
In generation, even though IPPs Company Limited (RPGCL)
are increasingly contributing to the is expected to change
energy supply, NEA’s own generation this situation. RPGCL is
including its subsidiary generating expected to support and
companies are still an influential force. augment NEA’s efforts
The establishment of GoN subsidiary in the development of
companies Hydropower Investment Nepal’s transmission
Development Company Limited system. Given the current
(HIDCL) and Vidyut Utpadan Company challenges to transmission
Limited (VUCL) is expected to further line development,
increase the government’s influence in private sector is not
generation. expected to engage
TRANSMISSION in the development
Nepal’s transmission system has of transmission lines
grown into a network of more than although alternative
3,538 km of transmission lines from modalities such as Build
66kV to 400kV level. The transmission Transfer (BT) are being
system expansion and upgradation has considered.
prioritized two key areas: CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 7
1. Development of a 200kV/400kV DISTRIBUTION
high voltage domestic NEA is the sole distributor of electricity.
transmission backbone along The power distribution function
involves planning, expanding, than major hydropower operations,
operating, maintaining, and around 23MW of electricity generation
rehabilitating the power distribution came from micro hydro schemes,
networks, including substations up to 12 MW from solar photovoltaic (PV)
the 33kV level, and providing consumer systems, and less than 20kW from
services such as new connections, 4 NEA a Year in Review – Fiscal Year 2017/2018
meter reading, billing, and revenue 5 ADB 2015 Energy Outlook for Asia and the Pacific. Manila
collection. In the FY 2017/18 NEA 8 NEPAL ELECTRICITY AUTHORITY
served 4 million consumers, sold 5,526 Due to the process of federalism and the dynamics of multi-
GWh of energy earning gross revenue layered governance,
of Rs. 55,468 million. Industrial and amendment to the Electricity Act 1992 is required. Clarity in
commercial consumers had only 1.98% project development,
share of total customers but provided energy infrastructure governance and operation of inter-
44.91%% of the total revenue4. municipal and provincial
Ensuring universal access to electricity markets will be required. Similarly, the Act does not
is a key government priority and NEA sufficiently consider the dynamics
works closely with GoN to achieving of today’s energy sector such as trade of electricity within
this goal. To accelerate the pace of and across the border.
grid extension and manage rural The current power sector stakeholder framework is shown
distribution systems more efficiently by the figure below:
and sustainably NEA has adopted wind energy5. GoN issued a subsidy
community participatory models in scheme for renewable energy in
rural electrification schemes. This model 2013 that has helped to better the
serves about 500,000 households. And delivery of renewable energy services,
yet, given Nepal’s geography it is not technologies and supply to households,
economical to expand the grid to serve communities and businesses in rural
every citizen through the grid. Off grid areas.
solutions are the only viable alternative Solar power provides an attractive
to reach the remotest areas and these option to diversify Nepal’s generation
are usually provided by the Alternate mix. Fall in price of photovoltaic solar
Energy Promotion Center (AEPC) and in panels in the international market and
some cases by NEA as well. good power purchase rate offered by
ELECTRICITY TRADE the NEA (Rs. 7.30 per unit) has been
Regional trade in electricity has been two key factors to attract investments
a long-cherished aspiration for the in solar. NEA is currently developing
countries of South Asia. Progress had its own 25 MW solar plant in Devighat
been slow but recent developments and signed agreements with IPPs for 20
have been encouraging. The recently MW with Viability Gap Funding (VGF)
issued cross-border guidelines by the support from ADB. Furthermore, NEA
Ministry of Power in India creates the has also signed PPA for a total of 40 MW
enabling framework and bodes well grid solar.
for the future of cross-border trading. 2.3 KEY PLAYERS IN
There are however existing trading THE ENERGY SECTOR
arrangements between Nepal and The Ministry of Energy, Water Resources
India. Electricity imports are governed and Irrigation is the key line Ministry
by the Power Exchange Committee that has oversight of the electricity
between Nepal and India, and trading sector in Nepal. There are several
arrangements between NEA and Indian government institutions (independent
power trading companies. and under the ministry) that derive
The energy banking mechanism allows their mandate and responsibilities from
Nepal to export power to India amid their specific Acts or sub-legislations.
surplus generation and import the The Electricity Act 1992 and the
same amount of power during dry Electricity Regulation 1993 are the main
season. Furthermore, India has opened laws governing the electricity sector in
its power exchange market to its Nepal. The Electricity Act 1992 covers all
neighboring countries. Nepal can now issues regarding survey, generation and
trade power through Power Exchange distribution of electricity along with the
markets for the day-ahead market licensing terms and regulations. The
(DAM) and term-ahead market (TAM). Electricity Regulation 1993 supports
In addition to enabling trade with the Act and sets out procedures for
India, the recently issued Cross-Border obtaining licenses for generation,
Power Trade guidelines by the Ministry transmission and distribution projects.
of Power, India will enable trade with THE ELECTRICITY
third countries such as Bangladesh and ACT OF 1992
Bhutan by utilizing India’s transmission The Act aims
network. to regulate the
OTHER RENEWABLES AND survey, generation,
ALTERNATIVE ENERGY transmission and
Nepal mostly relies on renewables for distribution of the
its off-grid electricity supply. Other electricity to foster
development and FIGURE 2: Stakeholder Framework
management of CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 9
the electricity while MINISTRY OF ENERGY,
ensuring safety WATER RESOURCES AND
and standardizing IRRIGATION (MOEWRI):
electricity services. The ministry is responsible for
THE NEA ACT 1984 formulating policies, regulations and
Enacted to establish standards for the sustainable long-term
the vertically development, protection, usage and
integrated state allocation of water resources and
utility, the Nepal energy.
Electricity Authority ELECTRICITY REGULATORY
that would supply COMMISSION (ERC):
power by generating, The ERC Act 2017, paved the way
transmitting and for the establishment of a regulator
distributing electricity. for the electricity sector. However,
THE HYDROPOWER the Commission has not been
DEVELOPMENT operationalized due to a delay in the
POLICY 2001 appointment of the Commissioners.
Outlines the The ERC has the mandate to develop
policies to engage and foster a transparent, competitive
and attract the and financially viable electricity sector
private sector in by:
the development 1. Setting technical and performance
of hydropower standards such as Grid Code,
and provide the Distribution Code, Operation &
enabling legislative Maintenance Guidelines Determine
and regulatory whole and retail tariff for generation
framework. and distribution respectively,
THE ELECTRICITY approve PPAs and wheeling charges
REGULATORY for transmission
COMMISSION (ERC) 2. Protect consumer interest by
ACT 2017 ensuring affordable, quality and safe
The ERC Act paves power to consumers
the way for the 3. Resolve disputes and
establishment of 4. Provide policy recommendations to
an independent the government
regulator for the WATER AND ENERGY
electricity sector. COMMISSION
TABLE 1: The key legislative framework that governs the SECRETARIAT (WECS):
sector are as follows: The primary responsibility of WECS
ENERGY SECTOR INSTITUTIONAL SETUP is to study and plan the water and
LICENSE AND MARKET energy resources of the country in an
ENTITIES integrated and accelerated manner. It
LEGAL AND REGULATORY has the mandate to formulate policies
AUTHORITIES and plan water resources related
MoEWRI,GON projects.
Policy and legislator DEPARTMENT
ERC OF ELECTRICITY
Regulation DEVELOPMENT (DOED):
NEA DoED is responsible for assisting
Generation MoEWRI in implementation of
Transmission overall government policies related
Distribution to electricity sector. DoED is GoN’s
System Operator licensing agency for all energy related
Rural Electrification services. It has the mandate to award
DoED Survey, Generation, Transmission
Licensing & and Distribution license. Licenses are
Implementation generally issued on a first come first
AEPC basis although some project licenses
Alternative Energy have been issued on a competitive
IPPs basis.
Generation ALTERNATIVE ENERGY
State-owned enterprises (SOEs) PROMOTION CENTER
Generation: VUCL, HIDCL, NEA Subsidiaries (AEPC):
Transmission: RGPCL AEPC’s main objective is to develop
Bulk Consumers and promote renewable and alternative
Electricity Cooperatives technologies in Nepal. It aims to
WECS mainstream renewable energy through
Policy & Advisory increased access and knowledge of
cleaner sources of energy to improve OBJECTIVES INITIATIVES
the living standards of people in Nepal. Electricity for All 100% electrification through on-grid and off-
Its strategic objectives are the following: grid
1. To popularize and promote the use solutions within 5 years
of alternative/renewable energy Encourage people’s participation in Develop 3000 MW of
technology. generation projects with 49%
2. To raise the living standard of the generation. (Nepal ko pani, Janata ko equity participation
rural people. from the public
3. To protect the environment. lagani, harek nepali bidhyut ko
4. To develop the commercially viable share dhani)
alternative energy industries in the Become self-sufficient in generation Generate 3000 MW in 3
country. years, 5000 MW in 5 years
NEPAL ELECTRICITY and 15000 MW in 10 years, of which 5000 MW is
AUTHORITY (NEA): for export
NEA is the main electricity utility of Increase consumption of electricity A target of 700 units per
Nepal. It is the sole purchaser and capita within 5 years and
distributer of grid electricity in the 1500 in 10 years
country and also operates a majority of Amend legislative framework Amend the Electricity Act 1992
the transmission network. Though there and the NEA Act
are multiple generators in the country, 1984, implement a Renewable Energy Development
NEA is still the largest generator and will Act, establish an independent regulator for the
continue to occupy an important role electricity sector
in electricity generation. Diversify energy sources Prioritize net metering for
STATE OWNED distributed generation,
ENTERPRISES (SOES): develop waste to energy projects, solar home
Rastriya Prasaran Grid Co Ltd systems and bio-mass (bagas)
(RPGCL) was established by the Promote unbundling of the energy Support the
Government of Nepal in July 2015 to organizational development of other
transmit and evacuate power for the sector agencies such as HIDCL, NEA Engineering
development and operation of the Company, VUCL, RPGCL, Nepal Power Trading
hydropower sector. Company and establish Distribution Companies
Hydroelectricity Investment and Foster energy trading markets Promote and enable energy
Development Company Ltd. (HIDCL) trading market
was formally established in July 2011 domestically and regionally to help manage surplus
to mobilize funds from domestic energy
and international resource-base to Competitive licensing and PPAs Introduce and implement
finance projects in middle to megasized competitive licensing and
generation, transmission and PPA procedures
distribution projects. Mobilize capital Mobilize concessional and commercial
Vidhyut Utpadan Company Limited capital from
(VUCL) was formally established domestic and international sources
in November 2016 to support Enhance transmission infrastructure Introduce enabling
the government in developing policies to engage private sector
economically viable electricity projects in the development and construction of transmission
and enhance the country’s energy infrastructure such as wheeling charge guidelines,
security. build-transfer (BT) and EPCF modalities.
INDEPENDENT POWER 2.4 POLICY
PRODUCERS (IPPS): OBJECTIVES
IPPs have been increasing their NEA was established by the Act, as a
investment on the generation side. IPPs wholly government undertaking, and
currently supply more than 30% of the upholds its original charter mandate
power in Nepal. NEA has already signed while fulfilling government policies and
PPAs with IPPs for more than 5500 MW. guidelines articulated and prioritized
These are mostly ROR projects with a over various time horizons.
few exceptions. Nepal’s transition to a federal
DONORS AND democratic republic is expected
DEVELOPMENT PARTNERS: to have a significant impact on the
Multiple donors and development structure and operations of NEA. The
partners are involved in the power scope and timing of these changes has
sector. Development partners such as to be ascertained, but the Constitution
the World Bank, Asian Development provides a framework and the MoEWRI
Bank, DFID, USAID, MCC, GIZ, KFW , JICA, White Paper 2018 provides a roadmap
NORAD, EU, EIB, AIIB and others support for implementing that framework.
generation, transmission, distribution, Some key elements of the White Paper,
rural electrification, clean cooking and which will affect NEA’s operations are
energy efficiency in varying capacities. outlined in Table 2 below:
10 NEPAL ELECTRICITY AUTHORITY CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
TABLE 2: White Paper, Ministry of Energy Water Resources 11
and Irrigation 12 NEPAL ELECTRICITY AUTHORITY
MOEWRI WHITE PAPER – KEY ELEMENTS SITUATIONAL
ANALYSIS 3.1 OVERVIEW
3. OF THE
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 OPERATING
13 ENVIRONMENT
3.1.1 POLITICAL FACTORS The environment
a. The promulgation of the new within which NEA
Constitution, which established a operates has a
three-tier government structure significant impact on
with Central, Provincial and Local the utility’s ability to
governments, will have an impact on meet its goals and
the electricity sector. The mandate targets. The following
for distributing electricity has analysis assesses
devolved to Provincial governments, and identifies factors
and generation licensing authority that may affect the
of up to a certain threshold may execution of the CDP.
also be devolved to Provincial and Awareness of such
Local governments. NEA’s network factors will help NEA to
development plans and service manage associate risks
delivery will have to be reoriented better.
along these demarcations. 14 NEPAL ELECTRICITY AUTHORITY
b. NEA must balance twin mandates, require an installed capacity of 5,199
being responsive to government MW by the end of the Plan period
imperatives while also operating as a FY 2022/23. Electricity demand and
financially sustainable entity. Election use is highly correlated with rising
cycles and public opinion can raise income levels and economic growth.
pressure for decision-making that High GDP growth rates will increase
might be skewed towards social the demand for electricity whereas
obligations such as irrational tariffs at lower than expected growth may
the expense of optimum commercial result in a greater surplus in the
viability. system.
c. International relations, especially b. Nepal’s economic growth in the
with neighboring countries like India last few years has been affected
and China, will have an important by political transitions, the
bearing on NEA’s operations. The devastating earthquake of 2015
supply demand mismatch, due to that cost the country over USD
the dominance of RoR and limited 7 billion in damages7 and the
PRoR and storage projects in the economic blockade that ensued.
system means power trade with The completion of the political
regional countries will be crucial in transition with the election of a
balancing supply and demand, and stable government has created
in optimizing the cost of power. a conducive environment for
While commercial considerations are economic growth to take off, as
expected to drive the contractual evidenced by the economic growth
arrangements that underline the rate of 7.5% in 2016-17.8
cross-border power trade, Nepal’s c. In terms of usage, access to the grid
regional dynamics is likely to be and mechanization of household
a dominant factor in the type of activities is expected to increase with
trading regimes that will materialize rising incomes and global exposures
as a result. of returning migrant workers.
d. Financial, economic and taxation Similarly, displacement of traditional
policies adopted by the government forms of energy consumption
will influence energy demand and (biomass), substitution of fossil
consumption patterns during the fuel imports in transportation and
Plan period. Dramatic changes in cooking; and rising industrialization
regional and global political factors are expected to contribute to an
may also change the price and increased demand for electricity.
demand of domestic electricity. d. Economic shocks, both local and
3.1.2 ECONOMIC FACTORS global, are invariably expected with
a. Although Nepal remains a Least consequences for the company’s
Developed Country, its core business outlook. Access to finance,
economic vision is to achieve exchange rate risks and contractors’
Middle Income Country status by ability to implement projects in the
2030. To get there Nepal requires country will affect the cost of doing
a growth rate of 8.5% and a Gross business.
Domestic Product (GDP) of 90 billion 3.1.3 SOCIAL FACTORS
in current USD.6 NEA has adopted a. Heightened awareness of one’s
a load forecast based on an annual rights and community activism have
GDP growth rate of 7.2% which will brought about positive changes
6 National Planning Commission (2016). Envisioning Nepal in Nepali society, but it has also
2030 created significant challenges for the
construction of power infrastructure. power lines in the “last mile” will
Power projects require acquisition not only facilitate communications
of land and right of way access for for smart grid operations but also
transmission lines. Displaced and result in new revenue streams
affected populations need to be through partnerships with
resettled and rehabilitated to ensure telecommunication companies and
their livelihoods are not disrupted internet service providers.
and their lives not made worse off. 3.1.5 LEGAL AND
However, social cost mitigation REGULATORY FACTORS
measures and implementing a. The legal and regulatory framework
challenges have become bottlenecks is expected to undergo significant
resulting in higher project costs and reforms during the Plan period.
time over-runs. Electricity is a concurrent subject in
b. Corruption and theft of electricity are the Constitution and the Electricity
ongoing challenges for NEA resulting Act 1992 needs amendment to
in substantial revenue loss for the ensure consistency with the new
company. Furthermore, lax attitude federal constitution.
and societal norms exacerbate 7 “Post Disaster Needs Assessment”, National Planning
these challenges. Though significant Commission (2015). Also see Simkhada, Shambhu Ram
progress has been made in the “Disaster Diplomacy”, MyRepublica, Kathmandu May
past few years, NEA will need to 05, 2015
continue its work with stakeholders 8 World Bank Statistics 2017
through community engagement CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
and set stricter penalties and robust 15
governance practices to tackle this b. The setup of the Electricity
social ill. Regulatory Commission, pursuant
c. Favorable trends in development to the ERC Act, is expected to result
indexes for Nepal such as rising in a well-regulated and transparent
levels of literacy, education and tariff-setting process and a cost
income implies greater demand reflective tariff. However, NEA must
for electricity. Changing lifestyles consider and manage possible
from the traditional to the modern delays in operationalizing the ERC,
is expected to result in a greater the risk of political expediency
percentage of the population taking precedence over cost
seeking access to grid connections. reflective tariff and scheduled
During this Plan period, NEA’s social reviews to accommodate revenue
objective of providing electricity requirements.
access to all will result in an c. The three tiers of government in
estimated two million new electricity federal Nepal may have their own
connections and will likely result in imperatives and expectations of the
increased electricity demand. energy sector. New rules and levies
3.1.4 TECHNOLOGICAL could affect the plans of both NEA
FACTORS and private producers.
a. Introduction of new technologies d. The operationalization of Regional
provides many potential benefits Offices as individual companies,
to NEA that include reduction in under provincial government, the
technical and commercial losses, establishment of independent
operational cost savings, increase Generation and Transmission
in productivity, increased energy Companies by the GoN, and other
efficiency, new or increased revenue institutions such as HIDCL are
streams and improved customer supporting the transformation of
satisfaction. These ultimately result in Nepal’s current energy market into
better long-term growth prospects. a more dynamic and complex one.
b. NEA recognizes that the digital The operationalization of the Nepal
revolution is coming to the power Power Trading Company will create
industry and new business models a market for trading electricity
are rapidly emerging. Net metering, and captive generation, which will
distributed generation, smart require a framework for open access
grids and the Internet of things and wheeling charges. NEA will be
are creating both opportunities required to operate through these
and challenges for NEA. The utility changes in market structure, and
will embrace this digital revolution at times, lead from a single buyer,
and modernize itself and reap the single supplier model to a multiple
dividends that come with it. buyer multiple supplier model.
c. Automating its metering and grid 3.1.6 ENVIRONMENTAL
operations can enhance NEA’s FACTORS
operational efficiency and transform a. The impact of climate change on
itself from a traditional to a modern hydropower projects is inevitable.
utility. Extreme weather patterns and its
d. Installation of fiber optic cables on effect on power systems that rely on
nature is well documented. Given temporal variations in demand and supply, Additional Import
Nepal’s hydro dominated power for balancing (d/D) will
system, the power infrastructures are be made to balance such supply shortfalls. As evidenced
vulnerable to floods, glacial bursts, from the table, such shortfalls,
and landslides. albeit minor, do persist during the Dry Season throughout
b. Hydrological changes can the Plan period. Energy
affect existing as well as under generation not required for consumption in the domestic
construction generation plants by market will be exported to
changing their expected output regional markets as Energy Surplus/Export (f/F). The
schedules with consequences for amount of energy exported during
project developers and power the Wet season grows substantially during the plan period.
system planners. b. Going forward, there are huge
c. Large storage projects are expectations on NEA to deliver
important for energy security quality, reliable and affordable power
and for maintaining a healthy to drive Nepal’s economic growth.
generation mix to balance Galvanizing billions of dollars to
seasonal and temporal variations finance this ambitious expansion
in load; but are associated with and modernization plan will not
significant environmental and only require NEA to demonstrate
social disruptions. The inundation better financial health, but also
of land and existing infrastructure, tap financing from domestic and
displacement of people and their international sources from both
livelihoods, impact on flora and public and private sectors.
fauna caused by the change in the c. Tapping international sources of
ecology are some of the adverse financing is a matter of necessity,
impacts that need to be mitigated not choice. Managing the foreign
and balanced against the need for exchange risk variation will become
these types of projects. critical than it has been. In the past,
d. Nepal’s strong push for maintaining these exposures were assumed by
a high percentage of forest coverage NEA without proper tools to manage
often conflicts with its ambition and mitigate associated risks. NEA
for development. These conflicting requires active engagement with
objectives have created challenges GoN, financial institutions and
to implementing projects that development partners to develop a
require forest clearances. A more comprehensive strategy to manage
coherent and consistent policy these risks.
is needed to meet these twin 3.2 ELECTRICITY
objectives without compromising DEMAND AND LOAD
either one. FORECAST
3.1.7 FINANCIAL FACTORS The load forecast adopted by NEA
a. NEA has been incurring financial is based on GoN’s energy demand
losses over the last 15 years due to forecast prepared by the Water and
chronic financial underperformance Energy Commission Secretariat (WECS).
that can be attributed to internal The forecast assumes a GDP growth
and external factors. External factors rate of 7.2% during the CDP period.
include non-adjustment of retail In the NEA adopted load forecast, the
tariffs on periodic basis, political following parameters have been used
meddling in its corporate affairs, for deriving the installed capacity from
foreign exchange losses and the the forecast energy requirement.
high cost of power purchase from TABLE 3: Load Forecast
domestic IPPs and India. These YEAR PEAK DEMAND (MW) INSTALLED CAPACITY
factors are beyond NEA’s control. (MW)
Internal factors include high system 2018/19 1,842 1,307
losses, bloated operating costs, cost 2019/20 2,225 2,454
and time overruns on key projects 2020/21 2,638 3,478
that contributed to NEA’s losses. 2021/22 3,062 4,119
16 NEPAL ELECTRICITY AUTHORITY 2022/23 3,366 5,199
The NEA adopted load forecast is presented in the table 52%
below: LOAD FACTOR
The following table shows the load forecast and the 25%
generation profile on a seasonal T&D LOSSES
level. Monthly energy demand, generation, deficit and 30%
surpluses have been aggregated RESERVE MARGIN
to compute seasonal demand, seasonal generation, AND OUTAGE
seasonal surplus and seasonal TABLE 4: Energy Balance Table
deficit. Energy Available (e/E) in the system is the sum of Dry Season: December to May (GWh)
Energy Generation (b/B) and Projected Demand a 4,130 4,990 5,915 6,866 7,546
Imports (c/C). In the event that energy available is Energy Generation
inadequate to meet demand due to (IPP+NEA) b 2,709 3,960 5,358 7,186 8,202
Import c 1,136 1,001 802 519 468
Additional Import for n Make energy system more efficient through demand side
Balancing d 285 210 198 117 158 management tools
Energy Available e=b+c+d 4,130 5,171 6,358 7,822 8,828 n Expand market by adding 2 million new customers
Energy Surplus/Export f - 181 443 956 1,282 n Increased operational and financial efficiency through
T&D Loss g 18.85% 17.00% 16.00% 15.00% 14.40% restructuring
T&D Loss h = e*g 778 879 1,017 1,173 1,271 n Expand and upgrade transmission and distribution
Sales i=e-f-h 3,352 4,111 4,898 5,693 6,275 operations
Wet Season: June to November (GWh) Threats n High cost of capital to finance capital expenditure
Projected Demand A 4,262 5,149 6,104 7,086 7,787 plans
Energy Generation (IPP+NEA) B 3,985 5,355 9,365 12,941 n Adverse effects of climate change and extreme weather
14,906 patterns on hydrology and structures
Import C 286 253 24 8 6 n New regulatory regime and delays in tariff reviews
Additional Import for Balancing D 112 133 1 - - n Distributed and self-generation by customers reduces
Energy Available E=B+C+D 4,383 5,741 9,390 12,949 quantum and increases variability of demand
14,912 n Economic slowdown or failure of economy to grow as
Energy Surplus/Export F 121 592 3,286 5,863 7,125 projected in the demand forecast will result in excess
T&D Loss G 18.85% 17.00% 16.00% 15.00% 14.40% capacity
T&D Loss H=E*G 826 976 1,502 1,942 2,147 n Inability to absorb all new generation that NEA has signed
Sales I=E-F-H 3,436 4,173 4,602 5,144 5,640 take-or-pay contracts for
2018/19 2019/20 2020/21 2021/22 2022/23 n New levies and taxes imposed by local, provincial and
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 federal governments
17 n Potential complications due to Federal restructuring
3.3 STRENGTHS CHALLENGES OPPORTUNITIES n Adverse movement in dollar and other foreign currencies
AND THREATS (SCOT) ANALYSIS n Inability to engage in trade of electricity with neighboring
The SCOT analysis is an important exercise for assessing countries due to political and economic reasons
the most relevant internal (Strengths and Challenges) and n Theft and leakage of electricity and collection losses
external n Delay in construction of projects due to social and/or legal
(Opportunities and Threats) factors. The analysis is a issues such as resettlement, Right of Way and local shares
diagnosis of the company to capitalize on strengths and NEA SCOT ANALYSIS
opportunities and mitigate 18 NEPAL ELECTRICITY AUTHORITY
weaknesses and threats in order to achieve NEA’s goals and 3.4 LESSONS FROM
objectives. THE PAST
TABLE 5: NEA SCOT Analysis In the last decade, NEA faced numerous
Strengths n Monopoly and monopsony market of an challenges including chronic load
essential service shedding, electricity theft and leakage
n High demand for electricity and energy services which resulted in unreliable service
n Presence across the entire country to its customers, financial loss to the
n Ability to access relatively cheaper sources of capital from company and economic loss to the
public and international sources nation. There are numerous interrelated
n Network of 4 million customers factors that contributed to this scenario,
n Improved brand name and public good will such as lack of long-term planning,
n Strong skilled technical human resources underinvestment in the sector, the lost
Challenges n Insufficient and inefficient transmission and decade due to conflict and political
distribution network turmoil, escalating losses due to project
n Poor and unsatisfactory quality of power particularly in construction delays, and social issues
rural areas relating to land acquisition and benefit
n Lack of focus on customer service and customer sharing.
experience The silver lining to this difficult period
n Weak Project management, procurement and contract has been that it culminated with
management capacity the end of load shedding due to a
n High internal construction and operation costs confluence of several positive factors
n Lack of automated data collection and analysis of its - a management team committed to
operations serving the needs of the customers first,
n Mismatch between demand and supply appropriate and optimal allocation of
n Traditional operating and management system supply, ability to manage the system,
n Lack of energy storage capacity enhancement of network capacity
n Limited transmission interconnection capacity with to import power from India and
neighboring countries distribute it to the load centers. But
n Rural Electrification – expensive to expand network into more importantly, the lessons learned
remote, distant and disperse locations have been invaluable and they will
Opportunities n Long term growth for demand of electricity be brought to bear as NEA provides a
n Reduce cost of energy through trade and economies of platform for economic development
scale as the power system expands of Nepal and looks to a period of selftransformation,
n Export and trade of power growth and success.
n Energy banking to meet deficit demand in dry season n Proactive and long-term
n Improve utility efficiency through automation, digitization planning: Power sector projects
and use of centrally integrated software have long gestation periods and
n Improve profits and reduce cost of supply via decrease in require long-term planning. The
AT&C losses long gestation period of power
projects is further complicated
by Nepal’s socio-political context NEA lacked capital to invest in its
– an evolving political landscape, network and systems to reduce
heightened social activism and losses and provide transparent cost
weak governance. NEA network accounting structure. This lack of
and infrastructure expansion plans timely adjustment of tariff ultimately
will require stipulating provision for cost the consumers reliable power
contingencies and redundancies. supply. Realizing the need for better
Similarly, the expansion of communication, transparency and
infrastructure needs to be based engagement with stakeholders, NEA
on realistic demand projections. plans to increase activities in this
Imbalances in supply and demand regard while preparing to engage
are damaging for both the economy with the newly established Electricity
and NEA’s financial well-being. Regulatory Commission.
Uncoordinated development such as n Demand side management:
power plants coming online before Given the demand profile of
the transmission infrastructure is in INPS with smaller morning peaks
place to evacuate power must be and larger evening peaks, NEA
managed properly. Load centers has underutilized demand side
should receive distribution upgrades management tools to shift the
to keep up with growing demand morning and evening loads to day
without overloading the system. and night time hours. Policies like
n Timely decision-making and time-of-day (TOD) tariffs can be used
delegation of authority: Delayed to flatten the load curve in the future
decision-making has caused while promoting the use of energy
huge financial losses to NEA in efficient appliances will help reduce
the form of penalties, increased peak hour demand.
construction costs and lost revenues. n Manual processes impeding
The success of the Chilime model efficiency and transparency: NEA
has highlighted the benefits of is heavily dependent on human
adopting the private company communication, decision-making
development model which has and action. Majority of NEA’s
enabled efficient decision-making data is gathered manually and is
through delegation of authority, and not digitized, which makes the
deployment of capital. NEA has since process prone to human errors.
used this SPV model to develop It has affected the availability of
other generation projects and will reliable and updated data across
explore the model for other types of departments. There is an urgent
power infrastructure development. need to develop an overall system
Learnings from this model will be to automate data collection and
integrated into the management availability in real-time. Availability
and governance of NEA, especially in of such data will help NEA to make
the delegation of authority. informed investment decisions for
n Enhancing energy security: The improving its network.
bitter experience of the economic CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
blockade following the devastating 19
2015 earthquake has had a 3.5 CORPORATE RISK MANAGEMENT
debilitating effect on the Nepali The execution of the Corporate Development Plan over the
psyche. The adverse impact was next five years is contingent on a variety of external factors
most felt due to the short supply of that NEA
energy products such as petroleum has either limited or no control over. Identification of the
and cooking gas. Although risks, the likelihood of their occurrence and the impact it will
electricity trading with India has have on the
been instrumental in ending load organization have been listed below. Knowledge of the
shedding, enhancing energy security potential risks will help NEA be mindful of them and prepare
still remains a top priority for Nepal. strategies to
n Timely adjustments of tariff: mitigate the risks should they occur.
Lack of timely adjustment of tariff FIGURE 3: Risks
was a major contributor of NEA’s KEY VARIABLES IMPACTING
poor financial health. Timely tariff CORPORATE DEVELOPMENT PLAN
adjustments were held hostage 1. Legal and Regulatory Environment
due to a philosophical divergence 2. Competition
between the Electricity Tariff 3. Reputational Risk
Fixation Commission (ETFC) and 4. Employee Productivity
NEA even as both parties had 5. Restructuring
the same objective of providing 6. Surplus Power
reliable and affordable power for 7. Power Trade with India
consumers. ETFC demanded NEA 8. Cost Reflective Tariff
improve on operational efficiency 9. Inadequate Succession Planning
and cost transparency before 10. Politicization of Work Force
approving tariff adjustments. But 11. Loss Reduction Targets not Achieved
12. Foreign Exchange Risk NEA is at the heart of
13. Liquidity/Cash Flow Risk the electricity sector,
14. Technology/System Failure Risk and its transformation
15. Financial and Market Risk into a modern capable
16. Natural Disasters entity is vital to the
17. Climate Change rapid development of a
FIGURE 4: Impacts & Likelihood reliable electricity sector.
LIKELIHOOD The primary objective of
IMPACT the CDP is to transform
20 NEPAL ELECTRICITY AUTHORITY NEA into a modern and
STRATEGIC THEMES efficient utility and make
AND GOALS electricity safe, reliable
4. and available.
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 22 NEPAL ELECTRICITY AUTHORITY
21 4.1 THEME 1 - NATIONAL PRIORITIES
Development of hydropower resources The CDP is not only guided by NEA’s desire to become an
is the cornerstone of Nepal’s economic efficient modern utility but
development. Years of unserved also by the fact that NEA is at present 100% government-
demand led to a deterioration of owned and as such, is the
Nepal’s economy and the standard designated agency for implementing the government’s vision
of living of its citizens. NEA is at the and plans.
heart of the electricity sector, and its The White Paper issued in May 2018 by the Honorable
transformation into a modern capable Minister Barsha Man Pun details
entity is vital to the rapid development the plans of the government for the sector. The Goals under
of a reliable electricity sector. The this Theme have been
primary objective of the CDP is to guided by the vision and plans laid out in the White Paper.
transform NEA into a modern and The following table lists
efficient utility and make electricity safe, specific Activities along the four thematic Goals:
reliable and available. TABLE 6: National Priorities
The CDP captures NEA’s strategic vision SN GOALS # ACTIVITIES
and priorities along three Themes. The 1. Expand and upgrade system capacity 1. Increase
strategic priorities will be achieved domestic generation capacity
through 17 Goals, each comprising to generate, transmit and distribute 2. Increase and enhance
of activities described in Sections 4.1 transmission capacity
to 4.3 below. The vertically integrated 5000 MW 3. Increase and enhance distribution capacity
utility has a dual identity. It is not only a 4. Increase and enhance cross-border
corporate body but is also fully owned infrastructure
by the government. As such, it has the 2. Increase per capita electricity 1. Build institutional capacity
added obligation of implementing the to increase
government’s vision and plans of sector consumption to 700 kWh per capita electricity usage
development and providing electricity 2. Prepare time-of-day and seasonal tariff
to all Nepali homes and businesses. strategies
The CDP comprises of these three 3. Liaise with government agencies to electrify
strategic Themes: the economy and increase electricity usage
1. National Priorities 3. Electricity for All 1. Build institutional knowledge and
2. Capable, Modern and Smart capacity
Utility on electrification needs
3. Improve Customer Care 2. Continue campaign to add new customers
The identified 17 Goals are Specific, to the grid
Measurable, Achievable, Realistic and 4. Improve Nepal’s Energy Security 1. Increase Nepal’s
Time-bound (SMART). Each goal has electricity generation
associated Key Performance Indicator capacity with special focus on PRoR and
(KPI) targets. The SMART goals will Storage projects
help NEA build its capability to 2. Prioritize the development of new projects:
implement government policies while PRoR, Storage, Pump-storage and
functioning as a modern corporate Battery stations
entity that provides reliable service to 3. Ensure a healthy generation mix as per the
its customers. An Activity Matrix with White Paper
Goals and annual KPIs is provided in 4. Market Integration
Section 8 of this document. NEA considers it an honor to be the primary institution to
Development of implement these four nationbuilding
hydropower resources Goals that will have significant implications for the
is the cornerstone development of Nepal, the
of Nepal’s economic success of its businesses, and the welfare of its citizens.
development. Years NEA also realizes that it alone
of unserved demand cannot accomplish these Goals and looks forward for the
led to a deterioration support of MoEWRI, other
of Nepal’s economy Ministries and all stakeholders in this important endeavor.
and the standard of 4.1.1 GOAL 1 - EXPAND
living of its citizens. AND UPGRADE SYSTEM
CAPACITY TO GENERATE, 5000 MW of power despite these
TRANSMIT AND challenges.
DISTRIBUTE 5000 MW The first aspect of estimating
As of FY 2017/18 INPS has a generation evacuation capacity is to conduct a
capacity of 1074 MW of which 1021 detailed investigation of transmission
MW is hydro-based. The system requirements between generation
is supplemented by 53 MW of points and load centers. Nepal’s
thermal power. The transmission and Five-year Transmission System Plan
distribution systems are capable of provides valuable information on the
evacuating and distributing Nepal’s exact transmission requirements for the
domestic generation and electricity coming years.
imported from the 12 cross-border To enhance evacuation capacity, NEA
interconnections. plans to build new 400 kV, 220 kV and
The White Paper lays a bold vision for 132 kV transmission lines that covers a
increasing Nepal’s generation capacity distance of 570 circuit kilometer (c-km),
to 5,000 MW within the stipulated 735 c-km and 2357c-km, respectively.
CDP timeframe. The government Similarly, substations with a total
also envisions increasing per capita of 6385 MVA will be added to the
consumption of electricity to 700 transmission system in the given time
kWh. An aggressive upgradation and frame.
expansion of infrastructure is required System Operation Department,
for NEA to meet the targets set by the Transmission Directorate and the
White Paper. A system that struggles Project Management Directorate will
to evacuate and distribute less than be responsible for meeting the KPIs of
1500 MW will need to be augmented Activity 2.
to transmit and distribute 5000 MW Activity 3: Increase and enhance
in less than 5 years. Nepal’s crossborder distribution capacity
infrastructure will also require The distribution network requires
substantial capacity enhancements major upgrades since overloading of
to import when in deficit and export conductors and transformers occur
when in excess. during peak hours. There is an urgent
Activity 1: Increase domestic need to upgrade the existing system
generation capacity and expand the distribution network
Domestic generation capacity is to enable per capita consumption
expected to reach close to 5000 MW increase, and addition of new
in the next five years. Construction connections.
of hydro power projects totaling a To enhance distribution
generation capacity of 4125 MW is in network, current
full swing and slated for commercial distribution capacity
operation. NEA is constructing projects needs to be improved,
worth 74 MW whereas NEA subsidiary which requires a detailed
companies and IPPs are constructing investigation and longterm
projects worth 808 MW and 2743 MW, Distribution Master
respectively. Plan. The plan should
The White Paper also identify the infrastructure
envisions electricity required to distribute
generation through solar 5000 MW of power to the
projects. A total of 500 projected 6 million NEA
MW of solar is expected to customers by the fiscal
come online in the next year 2023/24.
five years. As Nepal progresses its implementation
The Planning, Monitoring & IT of a Federal structure and division
Directorate, the Generation Directorate of responsibilities between Federal
and the NEA Subsidiary Company and Provincial entities, NEA plans to
Monitoring Directorate will be the three establish seven provincial distribution
primary Directorates responsible for companies. These companies may be
meeting KPIs of Activity 1. 100% subsidiaries of NEA or owned
Activity 2: Increase and enhance and operated by the Provinces or
transmission capacity may be a mixture of the two. The
Evacuation of power has been a major Activity Matrix details the exact circuit
implementation challenge in Nepal kilometers of 132kV, 66 kV, 33 kV and 11
due to reasons such as timely forest kV lines, substation MVA capacity and
clearances, compensation policies transformers to be added per Province
related to land acquisition and RoWs in the next five years.
and weak enforcement of existing laws. The Distribution & Customer Services
These challenges have made it difficult Directorate will be responsible for
for many transmission projects to be meeting the KPIs of this Activity.
completed on time and within budget. 24 NEPAL ELECTRICITY AUTHORITY
NEA plans to build the transmission Activity 4: Increase and enhance
infrastructure required to evacuate cross-border infrastructure
There are currently 12 transmission for about two decades due to an
interconnections with India; six are 33 imbalance in demand and supply of
kV lines and five are 132 kV lines. The electricity. NEA has been able to meet
first major interconnection, Dhalkebar domestic electricity demand only
- Muzaffarpur, is currently charged at in the last two years. In this context,
220 kV and will be upgraded to 400 kV developing policies and programs to
in the near future. Nepal’s present crossborder promote electricity usage is a new
transmission capacity, around phenomenon for NEA and will require
500 MW, will need vast upgrades to the development of new strategies.
cater to the growing electricity needs A new directorate called the Business
of the country as well as to export large Development Directorate (BDD) will
quanta of excess power in the coming be established in the second year of
years. the Plan period. The responsibilities of
In addition to the Dhalkebar- the existing NEA Subsidiary Company
Muzaffarpur interconnection Management Directorate will be
upgrade, the second cross-border taken over by BDD. In addition, it
interconnection, New Butwal – Sunauli will be responsible for exploring and
– Gorakhpur, with 400 kV capacity is developing new business avenues
expected to start commercial operation for NEA. Since NEA’s primary business
during the Plan period. Three additional is the sale of electricity, one of BDD’s
400 kV interconnections have been main tasks will be to promote and
planned: Inaruwa – Jogbani – Purniya in increase the use of electricity in the
the East, new Dhalkebar-Muzzaffarpur country. An Office and Management
line in the Center and Attariya – Bareilly Survey (O&M) will be carried out to
in the West. Furthermore, developers identify the resource requirements of
of the Upper Karnali 900 MW exportoriented the new directorate and departments
project plans to build a 400 kV within it. Management will ensure that
Upper Karnali – Lamki – Bareilly line and sufficient resources are invested and
SJVN Arun-3 900 MW export-oriented the directorate is operationalized within
project plans to build a 400 kV Arun-3 – the second year of the Plan.
Dhalkebar – Muzaffarpur line. The SJVN BDD will develop a Demand
Arun-3 cross-border line is expected Stimulation Action Plan that will
to be commissioned during the Plan identify concrete steps to be taken by
period. NEA to increase domestic consumption
The Transmission Directorate will be of electricity.
responsible for meeting the KPIs of this BDD and MDS (Managing Director’s
Activity. Secretariat) will be responsible for
4.1.2 GOAL 2 - INCREASE meeting the KPIs of this Activity.
PER CAPITA ELECTRICITY Activity 2: Prepare TOD
CONSUMPTION TO 700 and seasonal tariff strategies
KWH Although Nepal has a hydro-based
Electricity per capita consumption in system, there is a mismatch between
Nepal is among the lowest in the world. the electricity generation and
Given the country’s abundance of consumption profile due to seasonal
hydro resources and the direct linkage variation in the amount of water that
between the level of development of flows in the rivers. Given that the
a country and its per capita electricity generation capacity of most hydro
usage, the White Paper aims to power projects is designed at Q-40
significantly increase electricity usage. and that most projects are simple
The quest for increasing this high run-off-river projects, more electricity
quantum of electricity usage is a new is generated during the monsoon
undertaking for NEA and Nepal which months. The amount of electricity
has historically faced severe supply generated is also mostly constant
shortages. As a result, citizens had during day and at night.
learnt to consume less. The utility needs On the consumption side, the demand
to develop policies that systematically for electricity does not fluctuate as
encourage higher consumption as much between monsoon and winter
well as revise the practice of charging months. However, within a given day,
customers higher rates for more demand for electricity is higher in the
consumption. NEA thus plans to The first major interconnection,
implement seasonal and time-of-day Dhalkebar - Muzaffarpur, is currently
(TOD) tariff to encourage higher charged at 220 kV and will be upgraded
consumption and will work with other to 400 kV in the near future.
government agencies to devise a plan CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
to increase the use of electricity in 25
Nepali homes and businesses. mornings and evenings than during the
Activity 1: Build institutional night. Electricity demand during night
capacity to increase per capita off-peak hours are almost half of peak
electricity usage demand.
Nepal faced severe electricity shortage The disparity in the supply and
demand pattern poses a challenge for and INPS has sufficient peaking
NEA. It is magnified by the fact that capacity. Similarly, moving from a
most domestic generation assets are petroleum-based transport system
run-off-river projects that do not have to an electric one will provide ample
any storage capacity. It is therefore demand for electricity. Establishment
important to design and develop of a network of electrical charging
TOD and seasonal electricity tariffs to stations and lower night off-peak tariff
encourage more electricity usage in the will be required for the promotion of
monsoon season, and during off-peak electric vehicles. Furthermore, mass
hours. The new tariff strategy that will use of irrigation pumps during night
be developed by NEA during the Plan hours has the potential to significantly
period is expected to play an important increase electricity consumption.
role in promoting greater electricity NEA will work with MoEWRI, MoF,
usage during off-peak hours and MoICS and MoPIT to promote
summer months while also ensuring appropriate policies to increase
efficient use of electricity. electricity consumption. EAD-PMITD
The Economic Analysis Department and BDD will be responsible for
(EAD) and Planning, Monitoring & IT implementing this Activity.
Directorate will be responsible meeting 4.1.3 GOAL 3 –
the KPIs of this Activity. ELECTRICITY FOR ALL
Activity 3: Liaise with government The White Paper has an ambitious
agencies to electrify the economy but justifiable goal of providing
and increase electricity usage electricity for all in the next five years.
A nation’s per capita electricity usage NEA and AEPC are entrusted with the
is directly correlated with its per capita implementation mandate for ensuring
income. Hence, electricity use increases all Nepali homes have grid and off-grid
with increasing income levels. Nepal’s electricity. NEA currently has about 4
2017 per capita electricity usage was million customers and will serve an
around 170 kWh, which is among the additional 2 million customers to fulfil
lowest in the world. NEA strives to the universal access mandate.
change this reality. The development of a coherent Plan
One of the possible ways to increase that incorporates activities with budget
electricity usage is by increasing the required to achieve this ambitious goal
number of electrical appliances citizens is necessary at the outset. Given that
use in their daily lives. NEA will conduct a majority of urban and semi-urban
an assessment to identify electrical areas already have access to electricity,
appliances that can be used in Nepali remote and sparse communities will
homes. Similarly, the study will also be a priority for electrification during
identify the possibilities of increasing the Plan period. There are financial
the usage of electricity in Nepali offices implications to availing electricity to
and factories. Based on the results geographically distant areas where
of the study, NEA will make policy consumption is lower than urban areas.
recommendations to GoN on fiscal Additional financial support will be
policies to adopt to promote the use of required from GoN to meet the goal
energy-efficient electrical appliances. of electricity for all. Nevertheless, NEA
Fiscal incentives may be required is dedicated to implementing this
to make electrical appliances more policy objective with full vigor and
affordable. Likewise, fiscal policies that commitment.
make non-electric machineries more The massive electricity expansion drive
expensive may also be required. will be headed by the Community
Electricity can replace Rural Electrification Department
petroleum products. The (CRED) and NEA’s Regional Offices
substitution of cooking under the Distribution and Customer
gas by electricity has Service Directorate (DCSD). A separate
the potential to be a implementation office may be
game changer in terms established for the achievement of this
of moving towards an Goal.
electric economy. Fossil Activity 1: Build institutional
fuels still provide 16% of knowledge and capacity on
total energy consumed electrification needs
in Nepal. As much as A detailed research to identify areas
NPR 200 Billion worth and regions that require electricity
petroleum products are access will be beneficial for NEA and
imported annually. its mission to provide electricity for
Imported Liquid Petroleum Gas (LPG) all. The Electricity For All Action Plan
can be substituted by domestically will identify areas where expansion
generated and environment-friendly is required which will help develop a
electricity as long as the distribution holistic strategy and allocate resources
network is upgraded to supply larger required to meet this grand endeavor.
quantum of power to Nepali homes 26 NEPAL ELECTRICITY AUTHORITY
This bottom-up approach will require Nonetheless, NEA is committed to
all Regional Offices and Distribution continuously improve Nepal’s energy
Centers to generate up to date data on security and has long term plans to
the requirements of their regions. replace imported fossil fuels with
It may not be economical for the domestically generated hydro power.
central grid to supply electricity to Given the wide variation of availability
extremely remote and geographically of water in Nepali rivers between
challenging areas. Off grid solutions seasons, it is important to have a
will be sought for these areas in generation mix of different types of
coordination and collaboration with hydro power projects. PRoR projects
AEPC. The two organizations will work have a small reservoir and are capable
together to ensure that all sections of of storing enough water to generate
society have access to electricity in an at maximum installed capacity for 4 to
optimal and cost-effective manner. 6 hours on a given day. Additionally,
DCSD will coordinate to analyze and reservoir projects can store monsoon
develop a holistic document that water for use in dry months. The White
captures valuable knowledge to Paper calls for a mixed generation
guide the project at hand - attaining capacity consisting of 30-35% storage
electricity for all within the Plan period. projects, 25-30% PRoR projects, 30-35%
Activity 2: Continue campaign of RoR projects and 5-10% alternative
to add new customers to the grid energy sources. NEA is working towards
In the past years, availability of electric achieving this generation mix target.
meters was an issue that limited the Activity 1: Increase Nepal’s electricity
number of new customer connections. generation capacity with special
NEA will resolve this management focus on PRoR and Storage projects
issue in the first year of the Plan period. Hydro power projects with a combined
Furthermore, ordering and stock installed capacity of 4125 MW are at
keeping of meters will be properly various stages of construction and will
managed to ensure the availability begin commercial operation within the
of meters in all Distribution Centers. Plan’s timeframe. It took Nepal more
Additionally, DCSD will develop a than a century to develop 1074 MWs.
system to continuously track the The next five years will see an increase
purchasing and availability of meters. in installed capacity by more than
The planned activities of the Electricity 400%. This is a remarkable achievement
For All Action Plan will be implemented for Nepal. During the CDP term, the
by the Regional Offices. It is vital for total generation capacity will be further
sufficient budget be made available to supported by solar power plants. 63%
carry out all activities. In keeping with of the electricity consumed in Nepal
the new local government delineation was domestically generated in FY
in the Federal Structure, grid and CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
customer expansion activities will be 27
local government area based. 2017/18. By end of Year 5 of the Plan,
The goal of providing electricity for all NEA expects domestic generation to
in five years is an extremely ambitious meet 100% of demand.
plan that requires significant increase Given the importance of PRoR and
in funding from what has historically storage projects to Nepal’s energy
been provided by GoN to NEA for security, NEA has been focusing its
rural electrification. NEA plans to add efforts to develop such projects.
400,000 customers per year for the next Kulekhani III storage project (14 MW)
five years to meet this goal and hopes is expected to begin commercial
for successful collaboration with all operations in the first year of the Plan
tiers of government in this effort. More period. Nepal will have a combined
than 95% of the Nepali population will storage capacity of 106 MW with
be provided electricity by the central three cascading Kulekhani projects
grid. The remaining population, due once Kulekhani III begins generating
to the geographic remoteness, will electricity. Similarly, Upper Tamakoshi
be provided electricity using off-grid (456 MW), the largest hydro project
solutions through AEPC. currently under construction, is a
DCSD will be responsible for meeting PRoR with a 6-hour peaking capacity.
the KPIs of this Activity. The addition of Upper Tamakoshi to
4.1.4 GOAL 4 - INPS is a major milestone for Nepal’s
IMPROVE ENERGY hydro power development because
SECURITY it demonstrates the county’s ability to
Improving Nepal’s energy security is a finance and build large hydro power
high priority for GoN. The more Nepal projects. Completion of this project
is reliant on domestically generated will also enable electricity export to
electricity, the more secure it is. Usually, India during the monsoon season,
hydro power projects have a long and through a banking or trading
gestation period and large storage mechanism, Nepal can take back
projects take even longer to construct. electricity during the dry season.
Furthermore, along with Kaligandaki of the investigations in this Activity and
(144 MW), Middle Marsyangdi (70 the Economic Analysis Department will
MW), Marsyangdi (69 MW) and Chilime conduct the analysis for the utility-scale
(22.1 MW), the total installed capacity battery facilities.
of PRoR projects will increase to 955 Activity 3: Ensure a healthy
MW during the Plan period. Upper generation mix as per
Tamakoshi (456 MW), Upper Sanjen the White Paper
(14.8 MW), Sanjen (42.5 MW), Kabeli At present, most of Nepal’s installed
(37.6 MW) and Lapche Khola (99.4 MW) hydro power capacity is RoR projects.
are under-construction PRoR projects Of the 1074 MW installed capacity in
slated for commercial operation within FY 17/18, Nepal had 92 MW storage
the Plan period. capacity, 305 MW PRoR capacity
NEA, through NEA-owned subsidiary and 54 MW thermal capacity where
companies, is also rapidly developing as RoR projects have a combined
multiple PRoR and storage projects. installed capacity of 623 MW. The
Tanahu Storage (140 MW) is already in percentage break down between the
construction and will provide much targets provided by the White Paper
needed reservoir capacity. Likewise, and Nepal’s current generation mix is
Dudh Koshi Storage (635 MW), provided in the table below:
Tamakoshi V PRoR (95 MW), Chainpur TABLE 7: Generation Mix
Seti PRoR (210 MW) and Upper Arun TARGET % PRESENT %
PRoR (725 MW) are in advanced stages Storage 30-35 9
of preparation. Financial close and PRoR 25-30 28
construction of all four projects is RoR 30-35 58
expected to happen within the Plan Non-hydro 5-10 NA
period. Renewable
The Generation Directorate is 28 NEPAL ELECTRICITY AUTHORITY
responsible for the timely completion Due to the long gestation periods for
of Kulekhani III where-as the Business hydropower, it might not be possible
Development Directorate will ensure to meet the generation mix targets set
that all planned activities of the other by the government in this Plan period.
five projects are conducted on time Nonetheless, NEA understands the
and within budget. importance of attaining the targeted
Activity 2: Prioritize the evelopment mix for Nepal’s energy security and is
of new projects: PRoR, Storage, working towards it. NEA will henceforth
Pump-storage and Battery stations solely focus on the development of
The vision for 15,000 MW generation storage and PRoR projects as evidenced
capacity in the next ten years, as by the projects it plans to begin
laid out in the White Paper, requires constructing through its subsidiary
developing more PRoR and storage companies, and the technical
projects. The technical preparations investigations it is conducting of other
and project financing plans for Uttar storage projects.
Ganga Storage (828 MW) is expected to The Power Trade Department will take
be completed within the Plan period. heed of the policy guidelines provided
Similarly, NEA has initiated the feasibility by the White Paper and sign PPAs to
study of Begnas-Rupa Pump-Storage achieve the percentages derived by
project (150 MW). Additionally, NEA GoN.
will begin preliminary investigation of Activity 4: Market Integration
different PRoR and storage projects Integration with the Indian and
of at least 2500 MW during the Plan Regional markets improves Nepal’s
period. energy security. NEA will begin energy
In the last few years, there have been banking with India and trading within
promising advances in large-scale the Region. It is essential to provide
electricity storage technologies. If electricity to Nepali homes and
financially viable, such utility-scale businesses when there is a shortfall
storages would be an ideal fit for in domestic generation via imports
Nepal’s hydro electricity generation and exporting domestically produced
profile because surplus electricity electricity when there is surplus
can be stored and used when there generation. This interdependence
is higher demand. NEA will assess will help NEA supply reliable power
the suitability of such emerging to its customers and help keep
technologies and devise policies and the organization in good financial
tariffs to promote the commercial condition. Market integration will also
development of such facilities. Work make the system more efficient. Trading
on defining the policies and tariffs will of electricity in the day ahead and term
begin during the Plan period with an ahead markets will be initiated in the
aim of offering tariff rates within the first year of the CDP.
next five years. Nepal Power Trading Company and/
The Engineering Services Directorate or Power Trade Department will be
will be responsible for meeting the KPIs responsible for meeting the KPIs of this
Activity. 7. Re-brand NEA as a Modern 1. Build institutional capacity
TABLE 8: Transform NEA into a Capable, Modern and for
Smart Utility Corporate Entity Communications and Outreach
SN GOALS # ACTIVITIES 2. Increase Communications and Outreach
1. Reduce Aggregate Technical and 1. Build institutional activities
capacity to reduce losses 8. Preparedness for Regulatory 1. Increase institutional
Commercial Losses to under 15% 2. Develop infrastructure capacity to file annual
and system to digitalize requirements tariff petitions
data acquisition and generate reports 2. Determine scientific and pragmatic tariff
3. Invest in system infrastructure for loss reduction 9. Operationalize a competent Power 1. Establish a well-
4. Decrease non-technical losses resourced NPTC
2. Demand Side Management and 1. Build institutional Trading Company 2. Begin banking electricity with
capacity to make system neighboring
Energy Efficiency more efficient countries
2. Promote measures to make economy more 3. Begin trading of electricity
energy efficient 4. Competitive bidding of PPAs
3. Employ Demand Side Management tools to 10. Improve Contract and Project 1. Improve Contract
clip peak and fill valley of load curve Management abilities
4. Encourage consumers to change consumption Management 2. Improve coordination between various GoN
behavior agencies
3. Detailed Recording of Accounting 1. Identify and separate 11. Establish and operationalize a 1. Establish a well-
Generation, Transmission resourced BDD
Transactions and Distribution assets and liabilities well-resourced Business 2. Develop long-terms plans of
2. Determine per unit Generation, Transmission BDD
and Distribution cost of service Development Directorate 3. Quarterly Monitoring and
3. Create individual financial statements for the Reporting
seven provincial Distribution Companies / 12. Improve safety and ensure 1. Increase institutional
Regional Offices capacity to improve
4. Use of Modern IT systems 1. Improve IT policy and compliance of technical standards safety and ensure
standards compliance of technical
2. Develop a state-of-the-art communication standards
network between all branches 2. Audit for compliance of Technical and Safety
3. Establish a centralized Data Center and Standards
back-up system 3. Safety Awareness Public Campaign
4. Build IT Capacity of employees 4. Capacity building of employees to reduce
5. Develop infrastructure and system to digitalize workplace accidents
data acquisition and generate reports The availability of affordable, reliable and stable electricity
6. Implement Enterprise Resource Plan (ERP) is essential to Nepal’s development and progress. Thus,
Software NEA’s ability to transform itself into a capable, modern and
7. Develop automated billing and payment smart utility has a direct impact on the nation’s economic
system infrastructure development and the standard of living of its citizens. This
8. Modernize internal communications and reform process is ongoing and will be a major focus for NEA
record keeping during this Plan period.
4.2 THEME 2 - CAPABLE, MODERN Contd... Transform NEA into a Capable, Modern and Smart
AND SMART UTILITY Utility 4.2.1 GOAL 1 - REDUCE
NEA is a corporate entity and as such is expected to operate AGGREGATE TECHNICAL
in a commercially viable AND COMMERCIAL
and sustainable manner. Efficiency, automation, LOSSES TO UNDER 15%
modernization and improving Aggregate Technical and Commercial
customer service are some integral aspects needed for the (AT&C) losses have seriously hampered
sustenance of a 21st century the financial situation of NEA. A recent
corporate body. The Goals and Activities under this Theme study estimated that a reduction in
are intended to transform AT&C losses of 1% increased NEA
NEA into an efficient, capable modern entity within the Plan revenue by NPR 700 million. NEA in FY
period. 2017/18 had AT&C losses of 20.45%. The
The specific Goals and Activities under the Theme are listed Plan aims to rectify this loss by lowering
below: it to 14.4% in the next five years.
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 Activity 1: Build institutional
29 capacity to reduce losses
SN GOALS # ACTIVITIES NEA will focus on building its
5. Increase Non-tariff Income 1. Increase capacity and institutional capacity to reduce losses
mandate of Treasury in the Plan period. Developing the
Department knowledge of sources and causes of
2. Establish Business Development Directorate to losses and the equipment upgrades
increase income required to reduce them is the
6. Improve employee benefits, 1. Improve human resource precursor to being actually reducing
planning losses. The establishment of the
productivity and human resource 2. Enhance employee Energy Efficiency and Loss Reduction
benefits and safety Department (EELRD) under the
planning leadership of the Managing Director
was an important step towards building network will be made available to
NEA’s institutional capacity in this the Management on a real time basis
sector. Furthermore, two pilot programs through a dashboard.
are in the implementation phase to DCSD and IT-PMITD will jointly be
gather loss information and devise responsible for meeting the KPIs of this
concrete measures to overcome them. Activity.
EELRD has made significant progress Activity 3: Invest in system
in increasing NEA’s knowledge of infrastructure for loss reduction
the sources of losses and proposing Distribution system losses are the
remedies. It is currently conducting a result of a combination of technical
pilot program to automate the data and non-technical reasons. Technical
collection from five sub-stations. losses are caused by subpar distribution
Electricity data will be collected on real infrastructure while non-technical
time basis from automated sensors losses, also termed commercial losses,
in these sub-stations. A new software are caused due to theft and nonpayment.
at the Corporate Office will generate NEA will invest close to NPR 80 billion
load profiles of busbars and feeders. in the next five years to improve the
This technology is expected to inform distribution network to enable the
Management of losses incurred by efficient distribution of 5000 MW.
overloaded transformers, conductors, The FY 17/18 AT&C loss within the
feeders and busbars. It will allow NEA to distribution network is estimated to be
make effective investment decisions by 14.82% and is targeted for reduction to
identifying and prioritizing faulty and 10.08% during the Plan period. DCSD
overloaded equipment upgrades. will issue loss targets to all Regional
30 NEPAL ELECTRICITY AUTHORITY Offices, which in turn will allocate loss
NEA is also in the process of developing targets to their respective Distribution
a Distribution Loss Reduction Master Centers. A performance contract
Plan. This exercise entails extensive system with specified loss reduction
data collection, a computer model targets will be signed by Chiefs of
for system simulation, information Regional Offices and DCs. Meeting set
on losses across voltage levels and targets will result in financial incentives
a computerized distribution system as well as extra points for promotion
technical analysis program. The Master and priority in transfers.
Plan will offer concrete steps required Overloaded feeders will be
to decrease loss reduction in the identified and upgraded.
distribution system. NEA will carrying The Plan has set forth
out loss reduction activities in five a target of upgrading
Distribution Centers (DC) as a pilot. The 475 feeders in the next
program can be scaled up based on the five years. Decrease in
learnings of the pilot. congestion, especially
DCSD and EELRD will coordinate and during peak hours, is
monitor the KPIs of this activity. key to loss reduction.
Activity 2: Develop infrastructure NEA also plans to add
and system to digitalize data 2500 capacitor banks
acquisition and generate reports to improve voltage at
An Automated Data Acquisition Plan will the load-end which will
be developed in the second year of the reduce distribution losses.
Plan. It proposes the use of Geographic All DCs will be equipped with
Information System (GIS) mapping personnel and machinery to carry
technology to map sub-stations, out loss reduction tasks. The Regional
feeders, transformers, poles and meters Offices will ensure that distribution
in all 117 DCs and its sub-branches. transformers, energy meters, metering
The network mapping exercise will be units, poles, conductors and cables
accompanied by mounting automatic are appropriately stocked. These are
data emitting sensors in all distribution necessary pre-requisites for DCs to
assets. This measure will enable NEA meet their loss reduction targets.
to identify all loss prone areas on a On the transmission front, NEA plans
real time basis. It will aid in prioritizing to reduce transmission losses from
equipment replacements and upgrades 5.63% to 4.80% in the next five years.
required to reduce losses. Furthermore, To reduce transmission losses the
it will also help in identifying the exact present transmission voltage of 132
point of loss of connection or faulty kV will be upgraded to 400/220 kV
equipment. This knowledge is expected in most of the transmission links.
to help NEA repair the problem and Substations will be upgraded and
resume electricity supply in a shorter new substation infrastructures will be
time frame. The GIS mapping program installed as per consumer demand.
will be implemented in 35 DCs in the Furthermore, the Load Dispatch Center
first phase and implemented in all will be modernized and effective, and
DCs during the Plan period. The data economic load dispatch mechanism
on the flow of electricity within NEA will be developed.
DCSD, TD and LDC will be responsible Building institutional capacity of NEA
for meeting the KPIs of this Activity. to use DSM tools, promoting efficient
Activity 4: Decrease electrical appliances and encouraging
non-technical losses changes in consumer behavior will be
All DCs will continue implementing crucial to achieving DSM and energy
anti-theft activities. The Corporate efficiency KPIs.
Office and the Regional Offices will of the load curve. This plan will detail
ensure sufficient budget allocation measures to incentivize customers to
to all DCs for mobilizing security decrease evening time demand and
personnel and vehicles to carry out increase off-peak usage. Strategies such
loss reduction activities. All activities to as decreasing the price of power during
control theft and punish perpetrators off-peak hours, making energy efficient
will be compiled and published on an appliances financially more attractive
annual basis. and appealing to the ethos of the
NEA will also increase its efforts to general public for behavioral change
create social pressure to limit the will make the system more efficient.
theft of electricity and encourage all EELRD will be responsible for
customers to pay their bills on time. implementing the strategies of the Plan
The Public Relations and Grievance and meeting the KPIs of this Activity.
Handling Section under the General Activity 2: Promote
Administrative Department will measures to make economy
spearhead this public relations more energy efficient
campaign. Social media tools will be Nepal’s evening peak load is mostly
used to support the campaign. attributed to lighting. Past efforts
DCSD and Public Relations and to promote the use of compact
Grievance Handling Section will be fluorescent lighting (CFL) and
responsible for meeting the KPIs of this increasing use of LED lights in recent
Activity. years has helped reduce demand to a
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 certain extent. Additionally, introducing
31 higher electricity tariff during evening
4.2.2 GOAL 2 - DEMAND hours can act as an incentive to
SIDE MANAGEMENT AND shape customer’s decision-making by
ENERGY EFFICIENCY switching from inefficient bulbs and
Operating an efficient electricity tube lights to LED lights.
system requires both supply side and EAD will analyze the price of purchasing
demand side management (DSM). LED lights and the reduction in
The variation in the availability of electricity costs associated with its
water in the rivers of Nepal between use versus the price and usage costs
seasons pose a challenge in generating of traditional lights. Similar exercises
and supplying a steady quantum of will also be conducted for other
electricity. Two measures to mitigate household appliances such as fans, TVs,
supply side challenge include refrigerators and water pumps. A 28-
increasing Nepal’s storage and PRoR Watt modern fan, for example, has the
capacity and enhancing cross-border same performance as that of a 75-Watt
interconnections. In terms of DSM, traditional fan. NEA will provide policy
seasonal and TOD tariffs, use of efficient recommendations to the Ministry of
electrical appliances and change in Finance based on this analysis. The
consumption patterns can be used to recommendations will make a case
decrease demand for electricity during for fiscal incentives to energy efficient
peak hours and increase demand appliances to make them cheaper.
during off-peak hours. The use of these appliances will result
Activity 1: Build institutional in decrease in energy consumption
capacity to make system during peak hours.
more efficient 32 NEPAL ELECTRICITY AUTHORITY
Enhancing the institutional capacity of Establishing a Bureau for Energy
EELRD will have a significant impact on Efficiency under MoEWRI will be a
improving system efficiency of INPS. major achievement for Nepal. The
It is therefore essential to provide the Bureau should have the mandate of
department with additional human rating electrical appliances as per their
resources as well as budgetary support electricity consumption and durability.
to build up the team and increase the The development of a rating system
magnitude of its activities. It is also will provide important information to
equally important for the department consumers when they decide which
to increase its knowledge and knowhow appliance to purchase. For example,
of the subject matter. consumers may choose to buy a 5-star
EELRD also requires an effective rated refrigerator over a 2-star rated
long-term plan to fulfill its mandate. one even if the former is a bit more
It will therefore develop a Peak Load expensive. Similar ratings of appliance
Reduction Plan with the vision of efficiencies are also relevant in the
clipping the peak and filling the valley industrial and commercial sectors.
Efficient motors, energy efficient program.
industrial design and use of energy DSM tools will also be developed with a
efficient construction materials will focus on agriculture customers. Nationwide
help make the economy more energy usage of electrically operated
efficient. water pumps can dramatically boost
NEA will provide policy agriculture yield as well as increase
recommendations to MoEWRI for the electricity demand during off-peak
establishment of the Bureau. hours. A program to promote ground
EELRD is already piloting some energy water pumps with subsidies to make
efficiency programs. Ground water them affordable and a suitable tariff
pumps for agriculture is one such structure may encourage thousands
program that can have a significant of Nepali farmers to use these pumps
impact in improving voltage levels in for irrigation. Such interventions will
rural areas. Farmers currently suffer from be planned and implemented with
voltage fluctuations in the distribution relevant stakeholders during the Plan
system leading to inefficient pumping period. Promotional tariffs for seasonal
of ground water as well as frequent industries is another DSM to encourage
damages to their pumps. Three more usage of electricity during
solar-based water pump prototypes the monsoon months. Commercial
are being piloted. The first one is a operations such as fertilizer industries
community-level water pump powered and cold storages can be provided
by a 12-kW solar panel set. The other promotional prices during the wet
two are household pumps designed season.
to displace diesel and electric water The EAD and DCSD will be responsible
pumps. The successful implementation for meeting the KPIs of this Activity.
of this program will not only help Activity 4: Encourage consumers
farmers by increasing water available to change behavior
for farming but also help improve the Changing societal behavior is
voltage level in rural areas. EELRD plans enormously difficult yet extremely
to install as many as 1500 solar pumps important if Nepal wants to have a wellbalanced
during the Plan period. electricity demand-supply
EELRD is also in the process of installing situation. NEA will use Information
smart programable streetlights. These Communication Technology (ICT)
lights will be lit at full luminosity from platforms to inform customers about
6 to 11 PM, 30% luminosity from 11 peak and off-peak hours. It will appeal
PM to 4 AM and full luminosity for an to the goodwill of its customers and
hour in the morning. The timings and discourage them to use some electrical
luminosities can be programmed as appliances during peak hours.
required. The program is expected to NEA is currently running similar
provide massive energy savings, and are promotional campaigns and plans to
easy to meter. A pilot has been initiated conduct further promotions during
with Lalitpur Sub-Metro to procure and the Plan period. The campaign will
install 1000 lights. A nation-wide scale encourage customers to purchase and
up is planned thereafter. use efficient electrical appliances while
The EELRD and DCSD will be limiting use during peak hours.
responsible for meeting the KPIs of this DCSD, EELRD and Public Relations and
Activity. Grievance Handling Section will be
Activity 3: Employ Demand Side responsible for meeting the KPIs of this
Management tools to clip peak and Activity.
fill valley of load curve Efficient motors, energy efficient industrial
TOD tariff is an effective tool to improve design and use of energy efficient
load factor of a system. If the price of construction materials will help make the
electricity is higher during peak times economy more energy efficient.
and lower at other times, the usage CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
should follow accordingly. NEA has 33
started offering TOD and seasonal 4.2.3 GOAL 3 -
tariffs to its high and medium voltage DETAILED RECORDING
customers. The EAD will conduct OF ACCOUNTING
further analysis to determine the most TRANSACTIONS
suitable seasonal and TOD tariffs. With about 11,000 employees and
The objective of DSM is to shift some assets worth NPR 284 billion, NEA is
peak hours demand to off-peak hours one of the largest corporate entities
ensuring a more efficient system. of Nepal. It has more than 4 million
NEA plans to offer differential tariffs customers and physical assets in
to its high-end domestic customers all districts. Maintaining up-to-date
as soon as 3-phase Smart Meters are accounts of such a large corporation
installed for these customers. It will with more than 34 years of legacy is
also provide TOD tariffs to its domestic challenging. To address this challenge,
single-phase customers after successful NEA is working towards adopting
implementation of its Smart Meter and implementing Nepal Financial
Reporting Standards (NFRS) within the unit revenue of each business unit. To
duration of the CDP period. illustrate, Generation and Transmission
NEA’s Goal goes beyond just calculating businesses will be able to charge
total actual assets. More importantly, it Distribution for the power they supply
involves an in-depth exercise to identify and wheel. Revenue for Generation
and separate Generation, Transmission and Transmission will equal expense
and Distribution (GTD) assets within to Distribution. The determination
NEA. Furthermore, the accounting of transfer pricing between GTD is a
system will have the capability of complex exercise and should include
creating individual financial statements considerations on costs, return on
for the three GTD components. capital, and operational efficiency.
Separate books will also be maintained Once the revenues and
for the seven Provincial distribution expenses for individual
companies / Regional Offices during businesses are established,
the Plan period. it will be easier to monitor
The Administrative Directorate and and evaluate performance,
the Finance Directorate will be jointly and set improvement and
responsible for meeting the KPIs of this efficiency targets. This
Goal. exercise will also better
Activity 1: Identify and separate inform NEA of its cost
Generation, Transmission and structure and help in the
Distribution assets and liabilities setting and revision of
NEA’s core business activity includes consumer tariffs.
generation, transmission and The Finance Directorate will be
distribution of electricity. Its assets, responsible for meeting the KPIs of this
liabilities, revenues, and expenses Activity.
are assigned to a particular business 34 NEPAL ELECTRICITY AUTHORITY
division. To illustrate, the Kaligandaki Activity 3: Create individual
hydro plant and its associated assets, financial statements for the
debts, and expenses are assigned to seven provincial Distribution
the Generation Directorate, and all Companies / Regional Offices
132kV substations assigned to the The Board of NEA has already decided
Transmission Directorate. to form one distribution company
On the other hand, resources that per Province as per the new Federal
are shared amongst GTD need to structure. DCSD will develop a stepby-
be allocated to each business unit step plan to increase the capacity
based on their relative contribution. and mandate of seven Provincial
For example, costs associated with distribution units into preparation of
NEA’s subsidiary management unit eventual spin off into independent
should be allocated overwhelmingly companies. Management and
to Generation whereas the Corporate accounting personnel will be deployed
expenses may be allocated based in all seven units. The creation of
on asset size, number of employees, individual financial statements is a prerequisite
or the relative requirements for to the formation of separate
management and administrative distribution companies / Regional
support. This exercise of allocating Office.
existing assets, liabilities, and expense FD and DCSD will be responsible for
balances between GTD is a complex meeting the KPIs of this Activity.
and involved activity but can be 4.2.4 GOAL 4 –
achieved via appropriate Management USE OF MODERN IT
Information System (MIS) and SYSTEMS
accounting practices. NEA’s success will largely depend on its
This Activity shall include debt balance, ability to adopt and implement modern
fixed asset and inventory separation of IT systems in its day-to-day operations.
GTD units. The Finance Directorate will The use of modern IT systems is a
be responsible for meeting the KPIs of pre-condition to smooth and efficient
this Activity. operations of any corporation.
Activity 2: Determine per unit Automation, digitization, data storage,
Generation, Transmission and a workforce capable of using modern
Distribution cost of service IT systems and investment-decisions
Once internal division of GTD systems based on accurate data are key to
is accomplished, the next course of transforming NEA into a corporation of
action is to establish cost of service the 21st century.
for each activity. This is a relatively NEA is committed to making the
straightforward process because all necessary technology upgrades. It is
costs will have already been either already in the process of procuring new
assigned or allocated. In addition, NEA IT systems and will continue upgrading
needs to develop and implement IT infrastructure in the next five years.
an effective internal transfer pricing Planned reforms include amending
mechanism to determine the per NEA’s IT policy and standards,
developing a centrally connected tenure of this Plan.
communication backbone with entire The Project Management Directorate
NEA outlets, establishing a dedicated and the IT Department will be
Data Center backed by a Recovery responsible for meeting the KPIs of this
Center, and improving employees’ activity.
ability to use modern systems. Activity 4: Build IT capacity
Activity 1: Improve IT of employees
Policy and standards Benefits from the use of modern
NEA’s IT Policy requires amendment. IT systems can only be realized if
The revised policy framework, to employees are able to use these
be approved by the NEA Board, will systems properly. A modern entity
establish set protocols to be abided by therefore must do more than invest
the utility to make appropriate use of in modern systems. It must empower
technology and to ensure safety and its employees to use the new systems.
security of its data and systems. The The IT Department and Training Center
amended policy will require annual will thus develop an extensive NEA
Certified Audit of Software, Hardware Employee IT Capacity Building Plan.
and Network to ensure periodic update This plan will determine the types and
of all systems in use, to set appropriate frequency of trainings required for all
controls for securing data, setting a concerned offices. NEA understands
proper back-up system and hacking the importance of this activity and
prevention. therefore will ensure that trainings and
IT Department will be responsible for refresher courses are held properly and
meeting the KPIs of this activity. frequently. The targets and schedule
Activity 2: Develop a state-of-the-art of trainings are set forth in the activity
communication network between all matrix.
branches The IT Department and AD will be
Connecting all of NEA’s directorates, responsible for meeting the KPIs of this
Regional Offices and Distribution activity.
Centers through an optical fiber Activity 5: Develop infrastructure
network is a central part of the IT and system to digitize data
upgradations planned in this CDP. It acquisition and generate reports
is absolutely necessary that data is NEA plans to develop the infrastructure
accessed on a real time basis by all to digitize all data acquisition during
NEA outlets. Such state-of-the-art the CDP timeframe. Data will be
connectivity will enable centralization gathered automatically, stored centrally
of multiple types of data such as and accessed via a dashboard.
distribution system losses, electricity The first step of this process is
consumed, payroll, book of accounts to develop an Automated Data
and revenue among others. Acquisition Plan that categorically
IT Department will develop a road identifies all data that needs to be
map to connect all of NEA’s outlet gathered, and investments required
during the first year of the CDP and to develop this infrastructure. The IT
begin connecting all budget centers Department will develop this plan
including 117 DCs and sub-branches as with inputs from DCSD, TD and GD.
per the targets set in the activity matrix. The Plan includes GIS mapping of both
The IT Department will be responsible the distribution network (entire 117
for meeting the KPIs of this activity. Distribution Centers) and transmission
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 network while installing sensors
35 across the network. The targets for GIS
Activity 3: Establish a centralized mapping implementation and sensor
Data Center and back-up system placements are set out in the activity
An advanced Data Center that houses matrix.
all NEA data is a prerequisite to The IT Department, DCSD and TD will
transforming NEA into a modern entity. be responsible for meeting the KPIs of
The implementation of modern IT this Activity.
systems will generate large quantum of Activity 6: Implement Enterprise
data, which needs to be stored properly Resource Plan software
and accessed easily. Furthermore, a Enterprise Resource Plan (ERP)
back-up system with similar functional implementation is expected to
capability is required should the Data significantly improve NEA’s data
Center suffer some technical glitch or centralization and standardization
undergo routine maintenance. NEA is effort. It will increase NEA’s efficiency in
already in the process of establishing financial transactions, improve control
a well-equipped Data Center at its measures, provide transparency in
Corporate Office. A Data Recovery operations, increase accountability
Center is also required to make it a and provide a stable platform for data
secure system. The development and storage and access.
implementation of the Recovery Center The software will centralize the six
will also be accomplished during the modules of Integrated Financial
Management Information System capability of transmitting electricity
(IFMIS): usage data from high-end domestic
1) Fixed Asset customers to NEA’s main server.
2) Project Accounting Through these initiatives, NEA targets
3) Financial Management to have at least 75% of electricity
4) Payroll consumed measured by Smart Meters
5) Material Management in the next five years.
6) Human Resource Management Discount schemes will be
And three modules of Revenue introduced to encourage
Management System (RMS) customers to pay through
7) Metering Model these modern payment
8) Billing and Collection methods, which will
9) Energy Audit reduce paper use, save
The in-operation batch of software money and benefit the
were deployed over time to meet the environment. The Plan has
requirements of financial accounting, set an ambitious target to
human resources and material have 2 million customers
management. The systems were pay online within five
introduced at different points in time to years. The Central Bank will
cater to different functions and for the also be engaged to relax
most part operate in independent silos. online transaction amount
The procurement and implementation restrictions of high-use
of ERP will help integrate and centralize and industrial customers
all the different modules. so that they too are also
NEA also plans an able to pay online.
extensive capacity The Planning & Technical Services
building exercise to Department, ITD and DCSD will be
increase software responsible for meeting the KPIs of this
proficiency of relevant Activity.
employees. Refresher Activity 8: Modernize internal
training and constant communications and record keeping
support during the The transition towards a paper-less
implementation years will office will take shape during this CDP
be necessary to ensure period. All human resources and
capacity development in inventory recordings will be migrated
ERP use. to NEA’s online database. Internal
FD, the IT Department, DCSD and TD approval procedures will also be
will be responsible for meeting the KPIs operationalized via an online platform.
of this Activity. These measures will ensure data safety,
Activity 7: Develop automated security and access.
billing and payment system NEA needs to begin using electronic
infrastructure communications for internal
Modern IT systems enable electronic communications. SMSs and emails
bill issuance and payment via electronic offer scale, speed, reliability and cost
payment options. The utility is no efficiency. They enable messages
longer required to physically deliver to be sent to thousands of NEA
printed bills. Likewise, customers can personnel at once without incurring
pay online via internet and mobile significant additional effort or cost.
banking options, which is easy, quick Moreover, electronic messages create
and time-saving. NEA will, therefore, documentation trails, and enhance
invest in developing and expanding transparency and accountability
the online billing and payment between communicating parties.
infrastructure during the CDP period. NEA needs to use its Intranet to access
36 NEPAL ELECTRICITY AUTHORITY and disseminate information internally.
Data from smart meters will be The Intranet can serve as an online
integrated with ERP’s billing module. library with research, studies, reports,
Bills will be delivered to customers periodicals, journals and online training
via email and/or mobile phone SMS. courses. It can be a virtual repository
Multiple secure modes of payment for maintaining institutional memory.
will be available for customers, which Records of contractual transactions
include online bank transfers, mobile and investigations carried out by or on
transfers, use of some online payment behalf of NEA can be safely stored and
facilities as well as the existing counters access from the virtual library.
at NEA Distribution Centers. The Administrative Directorate and ITD
NEA is currently in the process of will be responsible for meeting the KPIs
incorporating information transmitting of this Activity.
modems in all existing TOD meters 4.2.5 GOAL 5 - INCREASE
used by NEA’s high voltage and NON-TARIFF INCOME
medium voltage customers. It also Approximately 90% of NEA’s income
plans to install Smart Meters with the is derived from electricity tariff.
Leveraging NEA’s assets to increase implementation strategy to generate
non-tariff income will benefit NEA and additional revenues.
its customers. A modern and capable MDS and the Business Development
institution must make optimal use of its Directorate will be responsible for
assets. Earnings from non-income tariff meeting the KPIs of the Activity.
can be used to subsidize the price of 4.2.6 GOAL 6 - IMPROVE
electricity. Electricity is an intermediate EMPLOYEE BENEFITS,
good. Cheaper electricity directly PRODUCTIVITY AND
translates to a lower cost of living and HUMAN RESOURCE
lower cost of production of goods and PLANNING
services. Employees are at the heart of NEA’s
Activity 1: Increase capacity and operations. Maintaining a high
mandate of Treasury Division caliber workforce and ensuring their
NEA’s current monthly revenue is welfare is of utmost importance to
approximately NPR 5 Billion and the the corporation. NEA should strive
organization has an on-going cash to hire the best and brightest of the
balance of about NPR 30 Billion. The nation; and should be able to provide
monthly revenue is expected to grow competitive compensation packages to
by 400% in the next five years. Access its employees. To enhance the capacity
to such quantities of cash necessitates a of its employees, the CDP will initiate
specialized Treasury Division within NEA a comprehensive corporate training
whose sole function will be to ensure program at all levels and strive to
that NEA is able to earn the highest provide a safe working environment
returns from the short-term cash at for all.
its disposal. Commercial Banks (with Activity 1: Improve
smaller quantities of available cash) human resource planning
have specialized teams responsible for The CDP envisions improving the
this function which NEA can similarly human resource planning of NEA.
adopt to handle large volumes of cash. Enhancement of employee capacity is
The Plan envisions strengthening the key to long-term growth. The Human
Treasury Division after conducting a Resource Department (HRD) will
rapid assessment of the responsibilities develop and finalize job descriptions
and requirements of the unit. for all positions in all Units and
The Corporate Finance Department will Departments. It will liaise with Unit and
be responsible for meeting the KPIs of Department heads to identify training
the Activity. needs. A Capacity Building Plan will be
Activity 2: Establish Business developed and implemented based
Development Directorate on the need-assessment conducted by
to increase income HRD.
NEA has approximately 30,000 Ropanis NEA plans to serve 6 million customers
of land in nearly all districts of the and manage a network capable of
country. Some of these plots are distributing 5000 MW. It must plan its
located in prime commercial areas. NEA human resource needs accordingly.
can earn handsome returns if these While use of modern technology such
lands are developed as commercial real as smart meters and online payment
estates. Similarly, NEA own a network mechanisms may decrease the need
of transmission and distribution of employees in certain areas, other
towers/poles that runs across all urban areas will need reinforcements. There is
and semi-urban areas. NEA could a dearth of finance and management
generate additional income by leasing experts in the organization.
this infrastructure for optical fiber Departments related to financial
connections. analysis, data analysis, planning and
The Business Development Directorate information technology will require
will be established to focus on additional human resources in the
additional income generation activities. coming months. A new Office and
Once established and operationalized, Management (O&M) Survey will be
the directorate will assess all of NEA’s conducted in the first two years of the
potential income sources and develop Plan.
a Non-Tariff Income Enhancement With an aim of improving NEA staff
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 capacity, the NEA Training Center
37 located in Bhaktapur will be developed
Plan. Other sources of additional as a Center of Excellence. NEA will seek
revenue generation are optimizing collaboration with specialized training
revenues from renting of optical fiber agencies to offer world class trainings
lines, transmission and distribution to its employees as well as other
infrastructures, leasing machinery interested participants. Spanning across
and developing real estate for 203 Ropanis, the Center of Excellence
commercial purpose and leasing. The will offer courses on all aspects of
plan will provide a full list of potential electricity ecosystem.
income sources and suggest an HRD will be responsible for meeting the
KPIs of the Activity. NEA’s media presence through both
Activity 2: Enhance employee traditional media outlets, social media
benefits and safety platforms and ICTs such as SMS and
Employee safety and security is a Viber messages.
top priority for NEA. The CDP aims to NEA may also appoint famous
decrease workplace accidents by at personalities as brand ambassadors to
least half from present levels. Improved help convey messages and appeal to
safety trainings will be provided to wider masses on issues such as control
employees on a regular basis to meet of electricity theft, use of efficient
this CDP target. Given NEA’s new electrical appliances and decrease in
technology adoption priorities, training electricity use during peak hours.
on use of ERP and other office software Other activities to increase media
and programs will be offered to all presence such as sponsorship of sports
relevant employees. teams, sponsorship of regional and
To attract the brightest talents and national events and corporate social
understand what can incentivize responsibility actions will also be
them to join, a Salary and Employee discussed in the Re-branding Action
Benefit Survey will be carried out to Plan.
understand the financial incentives PRGHS will be responsible for meeting
offered by similar businesses. the KPIs of the Activity.
NEA will strive to 4.2.8 GOAL 8 –
provide competitive PREPAREDNESS
compensation FOR REGULATORY
packages as well as REQUIREMENT
career development The Electricity Regulatory Commission
opportunities to its Act came into force in 2017 and will
employees. result in the formation of the Electricity
HRD will be responsible for meeting the Regulatory Commission (ERC). ERC will
KPIs of the Activity. become an important institution for
38 NEPAL ELECTRICITY AUTHORITY the electricity sector as it will regulate
4.2.7 GOAL 7 - RE-BRAND wholesale, transmission and retail
NEA AS A MODERN tariffs. NEA needs to adapt itself to be
CORPORATE ENTITY regulated and needs to file annual tariff
Developing brand value is extremely petitions as well as prepare documents
important to Corporations. NEA needs as mandated by ERC.
to move on from its image of a loss Activity 1: Increase institutional
making and functionally challenged capacity to file annual tariff petitions
utility to a profitable, modern and NEA needs to generate authentic cost
capable one. A specialized unit for of service data to file tariff petitions
Communications and Outreach will be annually. A dedicated team will be
established for this purpose. formed at the Economic Analysis
Activity 1: Build institutional Department (EAD) for this purpose. The
capacity for Communications and team will collect, analyze and prepare
Outreach tariff petitions annually. It will also be
A dedicated unit for communications responsible for preparing any other
and outreach is essential to re-brand document required by ERC. Capacity
and project NEA’s new image. An Office building trainings will be provided
and Management Survey (O&M) will to members of EAD to increase the
be conducted to increase the scope knowledge and skill set of the Unit.
of work and capacity of the Public PMITD and EAD will be responsible for
Relations and Grievance Handling meeting the KPIs of this Activity.
Section (PRGHS). The number of Activity 2: Determine scientific and
employees and skill sets required for pragmatic tariff
the formation of a competent team will A detailed tariff study will be conducted
be assessed. The Division will be under during the Plan term. The study will
the Administrative Directorate and will cover a wide variety of topics such as
be responsible for developing a longterm review of existing tariff structure, long
Communications Strategy and a run marginal cost of supply, demand
Re-branding Action Plan. elasticity, price elasticity, transfer
The MDS and AD will be responsible for pricing, lifeline tariff, TOD and seasonal
meeting the KPIs of the Activity. tariff among others. The goal is for NEA
Activity 2: Increase Communications to move towards a cost reflective tariff
and Outreach activities with a certain level of protection for
The Communications Strategy will lifeline users.
identify measures through which EAD will be responsible for meeting the
information can be shared with NEA’s KPIs of this Activity.
customers and will create platforms CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
through which customers can share 39
their queries and comments with 4.2.9 GOAL 9 -
NEA. Activities planned will increase OPERATIONALIZE A
COMPETENT TRADING decrease in demand in those
COMPANY neighboring countries. This presents an
The trade of electricity, similar to the opportunity for a barter of electricity
trade of goods and services, ensures between nations. Both Nepal and its
optimal use of scarce resources. neighbors would benefit from the
Electricity trade between and within exchange. An agreement detailing
countries is common all over the world. this barter of electricity needs to be
Nations sell power to neighboring finalized and signed by the affected
countries when they have excess parties at the earliest. Such an
and purchase power when they are achievement will be a major milestone
in deficit. Nepal has tremendously in Nepal’s history. NEA plans to begin
benefited from the import of electricity energy banking in the second year of
in the past few years, and can the Plan.
provide vast quantities of renewable The NPTC and/or the Power Trade
hydroelectricity to the South Asian Department will be responsible for
region in the future. meeting the KPIs of this Activity.
A company that specializes in the Activity 3: Begin trading of
trading of short term and long-term electricity
trading of electricity is essential for Nepal has till now been in a net
Nepal to maximize the benefits of deficit state. This will soon change
trading. India’s electricity trade market is after the many hydro power projects
dynamic and complex. NEA also needs currently under construction come
to develop a firm understanding of the into commercial operation. Domestic
electricity markets and mechanisms of generation will be more than demand
other countries in South Asia. during the monsoon season. However
The Nepal Power Trading dry season shortage, especially during
Company (NPTC) will peak hours, is likely to persist in the
need to acquire expertise near future. NPTC needs to purchase
in trading of electricity cheap electricity when in deficit and
quickly to maximize sell when in excess. The consumers
financial gains from need to be ensured of electricity supply
trading. while NEA needs to sell excess supply
Activity 1: Establish for its financial wellbeing. Therefore,
a well-resourced NPTC increasing NPTC’s knowledge and
The Office and Management Survey know-how of electricity trade is
(O&M) will be conducted for the paramount to Nepal’s welfare and
NPTC in the first year of the CDP. The the financial health of NEA. Trading of
O&M will identify positions required electricity in the day ahead and term
for the new company along with job ahead markets will be initiated in the
description for all positions. NEA will first year of the CDP.
ensure that NPTC is well resourced in The NPTC and/or the Power Trade
terms of human resources and that Department will be responsible for
adequate investments are made to meeting the KPIs of this Activity.
create a functional office environment. Activity 4: Competitive
Investment in capacity building of bidding of PPAs
employees will also be prioritized. NEA has plans to sign PPAs with
A long-term Business Plan is in the developers through a competitive
process of being finalized. It will bidding process. A procedural
categorize short-term, medium-term framework will be developed and
and long-term activities and priorities approval sought from the NEA Board
of the new company. and the ERC. Once the framework is in
The MD and NPTC will be responsible place, the Power Trade Department will
for meeting the KPIs of this Activity. initiate the process of competitively bid
Activity 2: Begin banking electricity PPAs.
with neighboring countries The NPTC and/or the Power Trade
Energy Banking may provide the Department will be responsible for
solution to alleviate Nepal’s seasonal meeting the KPIs of this Activity.
electricity imbalance in the short term. Nepal has tremendously benefited from
The demand for electricity in some the import of electricity in the past few
neighboring countries is higher in years, and can provide vast quantities of
the summer months. Farmers require renewable hydroelectricity to the South
electricity to irrigate their lands. High Asian region in the future.
temperatures also cause homes to 40 NEPAL ELECTRICITY AUTHORITY
turn on air-conditioners and fans. The 4.2.10 GOAL 10 - IMPROVE
increase in demand in bodes well for CONTRACT AND PROJECT
Nepali hydropower as they generate in MANAGEMENT
full capacity during these months. A majority of NEA’s ongoing projects
Similarly, there is a decrease in face delays as a result of contractual
production capacity of Nepali hydro issues with contractors and project
in the winter and a corresponding execution issues due to delays
in government approvals and/or OPERATIONALIZE A
obstructions by local populations. WELL-RESOURCED
Infrastructure projects face time and BUSINESS DEVELOPMENT
cost over runs as a result. Improving DIRECTORATE
contractual issues and project NEA established the Subsidiary
implementation is extremely important Company Monitoring Directorate
for NEA and the CDP envisions a (NSCMD) in 2018 to better manage
focused approach to improve the the activities of NEA subsidiaries. A
existing situation. majority of the 20 subsidiaries are
Activity 1: Improve Contract hydropower generation companies
Management abilities while some companies that provide
Under the leadership of the Managing consulting services, cross border power
Director, detailed discussions will be transmission and power trade have also
held on major issues faced by NEA been established.
during contract implementation. The The number of NEA subsidiaries is
discussion and analysis will include expected to grow in the future to the
relevant examples of problems faced point at which the subsidiaries will
with Contractors during contract have a combined generation capacity
implementation. These activities will greater than NEA’s own generation. The
result in the development of a Contract development of large projects requires
Management Improvement Action Plan. substantial financial commitment from
It will identify required measures that NEA and the dividends received from
will help in solving the challenges faced the subsidiaries will have a significant
by NEA while implementing contracts. impact on NEA’s financial health. It is
The plan will be shared with relevant therefore important for NEA to have
GoN ministries via MoEWRI with the aim good oversight into the activities of
of making legislative changes should its subsidiaries on a continual basis.
such changes be required for smooth The Plan envisages the creation of a
implementation of contracts. new directorate called the Business
A detailed contract management Development Directorate (BDD). The
training module will be developed in responsibilities of NSCMD will be taken
the first year of the Plan and all project forward by this new directorate during
managers and concerned officers will the Plan period. BDD will be responsible
be provided the training in years two for increasing NEA’s non-tariff incomes
and three. The training will also focus on by leveraging all of NEA’s assets.
improving the quality of contract NEA Activity 1: Establish
signs with Contractors. a well-resourced BDD
The MDS, AD, GD, TD and DCSD will be BDD will require a team of highly
responsible for meeting the KPIs of this capable employees to oversee the
Activity. activities of all the subsidiaries and
Activity 2: Improve coordination increase NEA’s non-tariff income.
with various GoN agencies Since a majority of the subsidiaries
As with Activity 1, under the leadership are currently under construction or
of the Managing Director, NEA will under detail study stage, it is important
hold detailed discussions on the major for NEA to be informed of any delays
issues faced by NEA regarding delays or disruptions to proceedings. The
in GoN approvals of infrastructure directorate will therefore be adequately
projects. Different focal persons will be staffed so as to enable it to have regular
appointed for different Ministries. oversight of all the activities of its
The appointed focal Improving contractual issues and project
persons will liaise and implementation is extremely important
correspond with their for NEA and the CDP envisions a focused
counterparts in their approach to improve the existing
assigned Ministries to situation.
resolve bureaucratic CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
hurdles and attain timely 41
GoN approvals. subsidiaries. A well-defined mandate of
Similarly, NEA will initiate dialogue the Directorate will also be developed.
with all three levels of government Similarly, a dedicated team within the
to resolve problems created by local directorate will have the mandate
populations. Furthermore, legislative to develop NEA’s Non-Tariff Income
changes required to allow prompt Enhancement Plan in the second year
implementation of projects will be of the Plan period and to implement
recommended to relevant ministries via the plan in the subsequent years. The
MoEWRI. ability to increase NEA’s non-tariff
The MDS, GD, TD and DCSD will be income has a direct effect on consumer
responsible for meeting the KPIs of this tariff.
Activity. Since making electricity
4.2.11 GOAL 11 – affordable is a key goal
ESTABLISH AND of theme three of this
CDP, increasing non-tariff Division (SMD) will be created as an
income is a high priority arm of the Energy Efficiency and Loss
activity. NEA will therefore Reduction Department (EELRD). It will
ensure that a wellresourced be responsible for increasing public
team be put awareness on safety standards. Similarly,
into place to achieve this the Contract, Norms and Specifications
important task. 42 NEPAL ELECTRICITY AUTHORITY
The MD and BDD will be responsible for Department (CNSD) will be established
meeting the KPIs of this Activity. under the Planning, Monitoring and IT
Activity 2: Develop long-term Directorate (PMITD). This department
plans of NEA Subsidiaries will be responsible for developing
BDDD will develop a NEA Subsidiary standards and protocols for NEA
Investment Plan that will detail operations.
the investments required for the Office and Management Surveys
development of all NEA subsidiaries. It is (O&M) will be conducted for these
important for NEA senior management two new units to identify the number
as well as the NEA Board to be regularly of employees and skill sets required
updated of the investments required to for the formation of competent SMD
fund the activities of its subsidiaries. The and CNSD. Ensuring the safety of its
Directorate will regularly update the customers, employees and equipment
Investment Plan and inform NEA of any is a high priority for NEA and therefore
changes in investment schedule. these units will be endowed with
Similarly, the NEA Subsidiary Dividend ample human and financial resources
Projection Report and the NEA to carry out these important mandates.
Subsidiary Pipeline Report will be CNSD will develop and/
developed and updated annually. or amend NEA’s Safety
BDD will be responsible for meeting the Standards, Generation
KPI of this Activity. Technical Standards,
Activity 3: Quarterly Transmission Technical
Monitoring and Reporting Standards and Distribution
BDD will institutionalize a process Technical Standards in the
of monitoring and getting quarterly second year of this Plan.
updates from all subsidiaries. It will The MD, PMITD, EELRD and CNSD will
compile these progress reports and be responsible for meeting the KPIs of
present to Senior Management. this activity.
Periodic investments required by Activity 2: Audit for compliance of
subsidiary companies will have a Technical and Safety Standards
significant impact on the financial The Technical Audit Division (TAD)
health of NEA and therefore it will be under the Internal Audit Department
prudent for BDD to have constant (IAD) will conduct compliance audit
oversight of all subsidiary activities. as per NEA’s Distribution Technical
BDD will be responsible for meeting the Standards in 5 Distribution Centers in
KPI of this Activity. the second year. Lapses in protocol
4.2.12 GOAL 12 - IMPROVE and non-compliance of standards will
SAFETY AND ENSURE be recorded and reported to the DC
COMPLIANCE OF Chief, the Regional Office Chief and the
TECHNICAL STANDARDS Deputy Managing Director of DCSD. All
The safety of NEA’s customers, its DCs and sub-branches, grid substations,
employees and its infrastructure are power plants and projects under
of utmost importance to NEA. It plans construction will be audited during the
to uphold and comply with a high Plan period.
standard of safety to ensure the safety A second audit to confirm compliance
and security of everyone concerned. will be conducted a year after the first
Work accidents, some fatal, are still audit concludes. The targets for the first
prevalent. Lapses in compliance of and second audits are provided in the
technical standards lead to disruptions activity matrix.
and damage expensive equipment TAD-IAD and DSCD will be responsible
while electricity-related accidents are for meeting the KPIs of this activity.
common in Nepal. There is room for Activity 3: Safety Awareness Public
improvement and NEA is determined Campaign
to improve the safety of the entire Electricity-related accidents
ecosystem. occur frequently in Nepal, some
Activity 1: Increase institutional unfortunately lead to fatalities. The
capacity to improve safety and Safety Management Division (SMD)
ensure compliance of technical and the Public Relations and Grievance
standards Handling Section (PRGHS) will jointly
The CDP envisions the creation of develop and implement a Safety
two dedicated units within NEA to Awareness Public Campaign. The
help improve safety and security campaign will focus on providing
standards. The Safety Management information to the general public
about the precautions required to be It is in the process of upgrading its generation, transmission
taken to avoid electric shocks. Social and distribution
media platforms, FM radios, print media infrastructure to be able to securely transmit and distribute
advertisements and online resources 5000 MW of electricity.
will be used to inform customers of Existing transmission and distribution infrastructure will be
precautions required to keep their enhanced through the
family members and houses safe. addition of capacitor banks and upgrade of overloaded
SMD-EELRD and PRGHS-AD will conductors and transformers. It
be responsible for meeting the is also constructing high voltage cross-border infrastructure
responsibilities of this activity. to enable Nepal to import
Activity 4: Capacity building of and export of electricity. The Dhalkebar – Muzaffarpur cross
employees to reduce workplace border transmission line will
accidents be charged at 400 kV in FY 19/20 and the 400 kV New
Accidents at the workplace, Butwal – Gorakhpur cross border
unfortunately, still occur frequently at transmission line is expected to be completed during the
NEA. It is imperative that employees tenure of the CDP.
be given the knowledge and the Customer safety is extremely important and NEA is in the
equipment to keep them safe while process of taking concrete
performing their duties. SMD and the steps to improve safety and limit electricity-related accidents.
Human Resources Department will Replacements of wooden
develop and implement a training poles, upgrading of clearance of conductors and
program for all Distribution Centers, replacements of old transformers
grid substations, power plants and TABLE 9: Improve Customer Care
projects under construction. SN GOALS # ACTIVITIES
SMD, HRD and DCSD will be 1. Supply reliable, affordable, 1. Ensure adequate electricity
responsible for meeting the KPIs of this supply with reliability,
activity. high-quality and safe electricity quality and safety
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 2. Provide affordable electricity
43 2. Use of Information 1. Use of ICT platforms to inform,
4.3 THEME 3 - IMPROVE CUSTOMER CARE engage and facilitate
The Goals and Activities under this Theme have been Communication Technology to customer queries
designed to improve the quality Improve Customer Experience 2. Improve complaint
of service provided by NEA. Customers deserve reliable, handling process and delivery
quality and safe electricity at will help in reducing accidents. Public
affordable prices. Ending load shedding was a major awareness is also equally important.
achievement and now NEA will Knowledge of appropriate household
turn its focus on improving the quality and reliability of wiring standards and earthing
electricity supply. It also needs requirements will decrease electricityrelated
to improve on the customer service it provides in terms of hazards in Nepali homes. The
prompt service delivery and Safety Management Division and Public
better complaint handling. Relations and Grievance Handling
The summary of the Goals and the Activities are listed in the Section will jointly develop and
table below. implement a Safety Awareness Public
All the Goals and Activities outlined in this CDP are directly Campaign.
linked to making reliable DCSD, TD, GD and BDD, SMD-EELRD
electricity available to Nepali consumers at an affordable and PRGHS-AD will be responsible for
rate. This theme is therefore of meeting the KPIs of this Activity.
utmost importance. Activity 2: Provide affordable
4.3.1 GOAL 1 - SUPPLY RELIABLE, AFFORDABLE, electricity
HIGH-QUALITY AND SAFE ELECTRICITY NEA plans to improve operational and
NEA needs to supply electricity to its customers through network efficiencies to provide reliable
domestic generation or power at the lowest cost possible.
through imports. The supply of electricity has to be stable Initiatives such as data automation,
and reliable. It also has online payment infrastructure and daily
to be affordable. Efficient investments in generation, MIS generation will help NEA become
transmission and distribution a more efficient institution. Increase
infrastructure as well as astute trading of electricity is in efficiency will result in decrease
required for the fulfillment of this in operating costs, which in turn will
Goal. reduce the cost of supply of electricity.
Activity 1: Ensure adequate electricity supply with reliability, Real-time identification of problems
quality and safety in the transmission and distribution
The best way for NEA to improve customer care is to provide network will enable prompt repair
customers with adequate resulting in a reduction in electricity
supply and high-quality electricity. This has by far been the supply disruptions.
biggest issue of the past two Reduction of AT&C losses
decades. There has been tremendous improvements on this from over 20% to 14%
front in the past two years. will significantly increase
NEA is not resting on its laurels though, and is now focusing NEA’s net revenue.
on improving the quality These revenue gains
and reliability of supply. should decrease the
cost of supply and make information.
electricity more affordable. It is important to ensure that
Trading of electricity with neighboring communication between NEA and the
countries will ensure optimal pricing customers is not a one-way stream. It
of electricity and will also make NEA is equally important for NEA to listen
financially viable. The CDP envisions to its customers. Platforms such as
active trading to begin from the first Facebook, Twitter, NEA website, etc.
year of the Plan period. Competitively can be used to receive feedback from
bid PPAs will also ensure procurement customers. The Public Relations Section
of electricity at the cheapest prices. will have adequate staff to interact
44 NEPAL ELECTRICITY AUTHORITY with customers and manage the
Both activities should help decrease the conversations. A system of channeling
cost of electricity. customer complaints to relevant
Attempts to increase non-tariff income department heads and seeking their
by developing the capacity of the response will be developed and
Treasury Division and leveraging implemented.
NEA’s physical infrastructure such PRGHS-AD will be responsible for
as transmission poles, optical fiber meeting the KPIs of this Activity.
network and real estate should result in Activity 2: Improve complaint
increased non-tariff revenues. Increased handling process and delivery
non-tariff income will be used to The existing complaint handling
subsidize NEA’s operating costs and will process will be improved and
make electricity affordable. implemented through all Distribution
DCSD, TD, PTD, BDD and EELRD will be Centers. The standardized process
responsible for meeting the KPIs of this will define the actions required to
Activity. be taken by NEA once a complaint is
4.3.2 GOAL 2 - USE filed and NEA’s response time will be
INFORMATION documented. A Complaint Response
COMMUNICATIONS Report will be generated by all DCs on
TECHNOLOGY TO a quarterly basis.
IMPROVE CUSTOMER The quarterly reports
EXPERIENCE will be complied and
Modern corporations maximize the an Annual Complaint
use Information Communications Handling Report
Technology (ICT) to promote and will be published for
engage with their clientele. A public review. Such
specialized Public Relations and documentation and
Grievance Handling Section will reporting protocol
be established for this purpose. will make NEA a more
This Section will develop NEA’s responsive utility and
Communication Strategy and promote improve the customer
NEA’s activities using all available care it provides.
communication channels. Efforts to The KPIs of this Activity will be met by
improve complaint handling process DCSD and PRGHS-AD.
and standardize service delivery will
also be set as targets for the CDP. 46 NEPAL ELECTRICITY AUTHORITY
Activity 1: Use of ICT platforms FINANCING THE
to inform, engage and facilitate CORPORATE
customer queries DEVELOPMENT PLAN
The use of ICTs is an efficient and 5.
cost-effective means to communicate CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
important NEA messages. They include 47
traditional media outlets such as print The successful implementation of a corporate plan requires
media, FM radios and television as well the availability of adequate
as newer social media platforms such resources including money, people and time. There are two
as Facebook, Twitter, NEA website, aspects of financing under
electronic-mail, SMS, dedicated hunting consideration: NEA’s capital budgeting policy and availability
phone lines, Viber, WhatsApp and any of financing relative to resource
other widely used programs. requirement. It is important that NEA develop a detailed
The Public Relations Section will funding framework and policy in
make use of all possible platforms to subsequent iterations of the CDP to provide a clear and
share important NEA messages to its transparent basis for investment
customers. Messages to discourage decisions that dictate capital requirements.
electricity theft, usage of energy 5.1 FUNDING FRAMEWORK
efficient appliances and limited usage AND POLICY
of electricity during peak hours can NEA requires large capital investments to upgrade
be sent to NEA customers in a costeffective and augment its infrastructure for generation
manner. Most social media (including subsidiaries), transmission, distribution
platforms are free to use and can be and for additional corporate assets. The investments
used multiple times to share important are long overdue and expected to significantly
improve revenues, operational efficiency and service Over the next 5 years, required investments steadily
quality. Notwithstanding their necessity, the required increase from NPR 56 billion in
investments are nevertheless very large compared 2018/19 to NPR 107 billion in 2022/23. The magnitude of
to NEA’s current and projected operating cash flows this increase can be explained
(IRG – internal revenue generation). NEA will need by investments in Subsidiaries, Transmission and
to access other sources of capital from banks and Distribution in the final two years
financial institutions (BFIs) and GoN for debt and of the Plan period. When combined, investments in
additional equity. Subsidiaries, Transmission and
The CDP assumes that the fund sourcing strategy Distribution in 2021/22 and 2022/23 account for 44% of the
will be in accordance to what was developed in total required investment.
the Financial Viability Action Plan (FVAP). 80% of The following table shows total investment required in each
investments in generation and transmission assets category over the next 5
will be funded by BFI (multilateral development years.
banks and domestic financial institutions) debt, Since the investment amounts are manifold higher than what
10% sourced through GoN equity infusion and NEA’s operations can
the remaining 10% through IRG. 70% of capital generate, it will have to access other sources of capital. The
investments in distribution will be financed by BFI following table shows NEA’s
loans, 15% through additional equity infusion and the IRG funding requirement when both lenders’ and GoN funds
remaining 15% through IRG. All rural electrification are deployed.
projects will be fully funded by GoN and minor As is evident from the table above, NEA’s total funding
corporate investments will be fully funded by IRG. requirement is reduced to 11% of
The CDP assumes that storage hydropower projects total capital costs. The remainder of the requirement is
(Subsidiaries) will be funded by a mix of 70% financed by loans from MDB/BFIs
debt and 20% GoN equity. The remaining 10% of and capital grants from GoN. The resulting IRG funding
capital cost will be covered by NEA IRG; there is no requirement compares favorably
public shareholding because it will be challenging with NEA’s operating income (profit before interest and
for storage projects to generate market returns. taxes) and cash flows generated
However, RoR and PRoR projects are considerably from operations. During the 5-year period, NEA’s operating
cheaper to build and therefore will attract public income is 2.13x IRG funding
participation. RoR and PRoR generation subsidiaries requirement. A more relevant metric, operating cash flows, is
will also be funded by 70% debt. Of the remaining also greater than IRG
30% capital cost, 49% will be raised through public funding requirement during this period at 1.79x IRG. NEA
issues (including locals and affected population) and operates adequate cash flows
the remaining 51% be financed by NEA IRG. to meet its IRG obligation throughout the Plan period. The
The investments proposed in the current CDP table below compares NEA’s
will be instrumental in serving customer demand IRG funding requirements with its operating income and
and modernizing NEA’s outdated transmission operating cash flows.
and distribution infrastructure. It is advisable 5.1.1 RESOURCE
for future editions of the CDP to develop a REQUIREMENT
comprehensive funding framework that evaluates NEA requires to raise capital
proposed investments on benefit to cost ratios. investments in the order of NPR 429
The quantitative analysis should take investment billion over the next 5 years. The
requirement, expected benefits, and NEA’s cost of greatest requirement will be in the
capital into consideration. There should also be upgradation and expansion of the
adequate consideration to non-monetary benefits, distribution network (NPR 164 billion)
or societal benefits of the investments. Such a followed by transmission network
framework would ensure the optimization of NEA’s (NPR 162 billion) and investments
financial resources and could also be incorporated in generation subsidiaries (NPR 86
into NEA’s annual budgetary process. billion). Investments in generation
TABLE 10: Funding Framework and subsidiaries includes investments
DEBT FUNDED EQUITY FUNDED BY EQUITY FUNDED in mega projects such as Upper
EQUITY FUNDED Arun, Dudhkoshi and Uttar Ganga.
BY MDB/BFIS GON/LOCAL GOVERNMENTS BY IRG BY Since these projects are at the preconstruction
PUBLIC EQUITY stage and the timings
NEA Generation 80% 10% 10% - associated with their implementation
Subsidiaries (Storage) 70% 20% 10% - is uncertain, actual investment
Subsidiaries (RoR/PRoR) 70% 15.3% 14.7% requirements will vary in accordance
Transmission 80% 10% 10% - with individual rates of project
Distribution 70% 15% 15% - implementation. It is important to note
Rural Electrification - 100% - - here that NEA will be merely raising
Corporate - - 100% - incremental capital for its generation
48 NEPAL ELECTRICITY AUTHORITY subsidiaries as their anchor developer.
At the end of the plan period, NEA’s assets will have grown In such cases, the debt capital raised
by a factor of 1.7. Managing will not impact NEA’s balance sheet.
a change of this magnitude requires meticulous planning and NEA will also require sizable
significant improvement investments to develop and overhaul
in management capabilities and efficiency. its generation plants (NPR 15 billion)
5.1.2 RESOURCE and miscellaneous corporate projects
MOBILIZATION PLAN (NPR 1 billion). Estimated investments
are shown in Table 11.
The total investment IRG Coverage – EBIT 1.52 1.10 1.56 3.16 2.78 2.13
required over the next 5 IRG Coverage – CFO 1.99 1.09 1.51 2.38 1.88 1.79
years dwarfs NEA’s current ALL FIGURES 2018/19 2019/20 2020/21 2021/22 2022/23
balance sheet, with asset TOTAL
size of NPR 285 billion. IN NPR MILLIONS
TABLE 11: Resource requirement TABLE 15: Resource Requirement from Debt Providers
Generation 15,380 Generation 3,798 5,423 3,083 - - 12,304
Subsidiaries 86,451 Subsidiaries 935 4,217 7,779 13,346 17,666 43,943
Transmission 162,120 Transmission 23,293 28,073 34,715 25,827 17,789 129,697
Distribution 163,575 Distribution 7,000 7,700 14,367 16,117 16,117 61,301
Corporate 1,250 Total 35,026 45,413 59,944 55,290 51,572 247,245
Total 428,776 ALL FIGURES 2018/19 2019/20 2020/21 2021/22 2022/23
TOTAL (NPR MILLIONS) TOTAL
TABLE 12: Total Financial Resources Required IN NPR MILLIONS
Generation 4,748 6,778 3,854 - - 15,380 TABLE 16: Resource Requirement from GoN
Subsidiaries 3,113 9,332 17,178 24,506 32,322 86,451 Generation 475 678 385 - - 1,538
Transmission 29,116 35,091 43,394 32,283 22,236 162,120 Subsidiaries 1,315 2,904 5,468 6,744 9,129 25,560
Distribution 15,000 31,000 40,525 41,025 36,025 163,575 Transmission 2,912 3,509 4,339 3,228 2,224 16,212
Corporate 250 250 250 250 250 1,250 Distribution 6,500 21,650 23,079 21,454 16,454 89,137
Total 52,227 82,451 105,201 98,064 90,833 428,776 Total 11,202 28,741 33,271 31,426 27,807 132,447
ALL FIGURES 2018/19 2019/20 2020/21 2021/22 2022/23 ALL FIGURES 2018/19 2019/20 2020/21 2021/22 2022/23
TOTAL TOTAL
IN NPR MILLIONS IN NPR MILLIONS
TABLE 13: Resource mobilization Plan - IRG Requirement 5.1.3 FINANCIAL
Generation 475 678 385 - - 1,538 PROJECTIONS FOR
Subsidiaries 863 2,211 3,931 4,416 5,527 16,948 PLAN PERIOD – STATUS
Transmission 2,912 3,509 4,339 3,228 2,224 16,212 & TRENDS OF KEY
Distribution 1,500 1,650 3,079 3,454 3,454 13,137 FINANCIAL RATIOS
Corporate 250 250 250 250 250 1,250 NEA’s financial performance during
Total 6,000 8,298 11,984 11,348 11,455 49,085 the Plan period will be fueled by
ALL FIGURES 2018/19 2019/20 2020/21 2021/22 2022/23 aggressive increases in demand with
TOTAL commensurate expansion of supply.
IN NPR MILLIONS The key driver of financial performance
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 will be tariff revisions in FY 2019/20
49 and FY2020/21 to bring average tariff
NEA anticipates the largest contribution of capital from closer to the cost of supply. Tariffs will
various debt providers: bi-lateral have to be increased by 12% each year
and multilateral development agencies; local BFIs and during the revisions. The tariff revisions
superannuation institutions. NEA recommended here are the absolute
requires capital infusion of NPR 247 billion from these minimum required to cover operating
institutions over the Plan period. costs and be able to fund NEA’s IRG
Table 15 outlines amounts anticipated from the debt capital with an adequate margin of safety. They
providers. Of the total debt do not incorporate an explicit return on
required, the amount raised on behalf of subsidiaries (NPR investment for NEA, which if included,
44 billion) will not be carried will result in higher tariffs than what has
in NEA’s balance sheet and will not attract interest been projected.
payments. NEA’s profitability will
Although NEA’s assumptions for raising capital seem be further enhanced
aggressive, assurances for much by reductions in AT&C
of the funding have been received. A significant portion of losses, with such losses
the required amounts have under 15% at the end
been already committed by various agencies. Furthermore, of the Plan period.
GoN will also contribute to Energy deficit will rapidly
NEA’s capital requirement in the following manner as decrease, and NEA will
outlined in the table below. be a net exporter within
In summary, NEA will likely have both internal and external the Plan period. 90% of
resources to finance its excess generation will be
ambitious capital expansion plans based on IRG guidelines exported to the regional
adopted by the FVAP. In this market. In subsequent
respect, the challenge for NEA will be to secure timely tariff years, profitability is driven
revisions, realize value from by the interplay of growth
excess energy by trading and managing increasing interest between demand and
costs. supply.
TABLE 14: IRG Funding Coverage Ratios NEA has planned investments of close
IRG 6,000 8,298 11,984 11,348 11,455 49,085 to NPR 250 billion in transmission
Operating Income (EBIT) 9,124 9,110 18,749 35,815 31,842 and distribution (excluding rural
104,640 electrification) during the Plan period.
Operating Cash Flow 11,961 9,020 18,128 27,012 21,579 Since transmission and distribution
87,700 assets cannot be monetized in isolation,
(CFO) their cost has to be recovered by
incorporating them in final consumer augmentation is expected
50 NEPAL ELECTRICITY AUTHORITY to total NPR 20 billion
tariffs. Therefore, NEA will need the tariff increases to pay during the CDP period,
for power purchase costs and 52% of NEA’s total forecast
additional financing (interest costs). Projected profit after profits.
taxes increases from NPR 4 CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
billion in 2018/19 to NPR 11 billion 2022/23, close to 51
increase in revenues by a factor of It bodes well for NEA that its financial health is projected to
2.80. Profitability is also impacted due to conservative be satisfactory even after
assumptions on the sale of export such intensive capital expansion and conservative treatment
power. Table 16 shows NEA’s projected Income Statement of surplus energy. This
for the Plan period. highlights the importance of securing the best possible
TABLE 17: Projected Income Statement for the CDP period financing terms and quickly
Revenue from Sale of Power 67,531 92,227 118,140 operationalizing the power trading company to address
134,498 147,711 these critical issues at the
Revenue from Export - 1,914 16,169 31,569 39,848 earliest possible.
Other Income 7,288 8,016 8,818 9,700 10,670 5.1.4 IRG COVER AND CONSUMER TARIFF SCENARIOS
Dividend Income 162 1,115 1,256 1,256 1,679 NEA’s ability to maintain profitable operations and finance its
Expenses capital expansion
O&M Cost 15,954 17,230 18,608 20,097 21,705 initiatives largely depend upon its ability to secure timely
Employee Expenses 11,140 12,031 12,994 14,033 15,156 increases in consumer tariffs.
R&M 2,623 2,833 3,060 3,305 3,569 In the base case scenario, NEA is able to secure 12% tariff
A&G 2,190 2,365 2,555 2,759 2,980 increases in FY 2019/20 and
Purchase of Power 41,623 67,816 97,579 111,663 136,915 in 2020/21. As a result, NEA is able to generate adequate
Fuel consumption - - - - - amounts of profits and cash
Royalty 1,778 1,778 1,778 1,778 1,778 with adequate margin of safety. However, if NEA is not able
Transmission/Wheeling Charge 1,036 1,036 1,036 1,036 to secure any tariff increase
1,036 during the CDP period it will neither be able to fund capital
Total Expenses 60,391 87,860 119,002 134,575 161,434 expenditures nor become
EBITDA 14,590 15,412 25,381 42,448 38,474 financially sustainable. As is shown in the table below, NEA
Depreciation 5,466 6,302 6,632 6,632 6,632 will require average annual
EBIT 9,124 9,110 18,749 35,815 31,842 escalations of 8.5% in consumer tariffs to achieve similar
Interest on Loan 3,348 7,633 8,288 12,212 15,701 results as the base case.
Interest on WC Loan 797 949 1,100 1,232 1,265 TABLE 18: NEA’s total forecast revenues
Profits Before Tax (PBT) 4,979 528 9,361 22,371 14,876 Gross Margin 0.42 0.33 0.31 0.36 0.31
Income Tax 1,245 132 2,340 5,593 3,719 EBITDA Margin 0.19 0.15 0.18 0.24 0.19
Profit After Tax (PAT) 3,734 396 7,021 16,778 11,157 Operating Income Margin 0.12 0.09 0.13 0.20 0.16
ALL FIGURES IN NPR MILLIONS 2018/19 2019/20 PAT Margin 0.05 0.00 0.05 0.09 0.06
2020/21 2021/22 2022/23 Interest Coverage Ratio 3.52 1.80 2.71 3.17 2.27
The table below highlights some key Fixed Charge Coverage Ratio 1.16 1.07 1.12 1.20 1.12
operating and profitability ratios for Operating Ratio 21% 17% 13% 11% 11%
NEA during the Plan period. While ALL FIGURES IN NPR MILLIONS 2018/19 2019/20
profitability metrics are projected to be 2020/21 2021/22 2022/23
satisfactory through most of the period, TABLE 19: IRG Cover and Consumer Tariff Scenarios
there is no general trend. Profitability IRG Cover IRG Cover IRG Cover IRG Cover IRG Cover IRG
is influenced by the interaction of Cover
network (Generation, Transmission, - EBIT - CFO - EBIT - CFO - EBIT – CFO
and Distribution) expansion and retail 2018/19 1.52 1.99 1.52 1.99 1.52 1.99
revenue growth (driven by both usage 2019/20 1.10 1.09 n/a 0.09 0.75 0.80
and tariffs). The two main reasons Year 2020/21 1.56 1.51 n/a n/a 0.96 0.97
behind uneven profitability are 2021/22 3.16 2.38 0.75 0.40 3.37 2.40
i. uncertainty in prices and quantities 2022/23 2.78 1.88 0.16 n/a 4.13 2.71
associated with energy exports Total 2.13 1.79 0.28 0.19 2.29 1.80
ii. financing cost associated with BASE CASE NO CHANGE IN TARIFF ANNUAL 8.5%
network expansion and upgradation INCREASE
In line with the assumptions of the 52 NEPAL ELECTRICITY AUTHORITY
FVAP, the forecast assumes that only RESTRUCTURING
90% of surplus energy is sold. The 6.
price at which surplus energy is sold CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
is not certain as of now. This effect 53
is more pronounced in years 4 and 6.1 RATIONALE FOR
5, when energy exports become RESTRUCTURING
significant. Another reason for declining Nepal is at a historical juncture, and so is its electricity
profitability is increasing interest cost market. The electricity sector has evolved from one
driven by NEA’s network expansion and in which NEA was solely responsible for transmission,
upgradation initiatives. generation and distribution to one where there
Interest expenses on are multiple actors in each of these verticals. In the
account of transmission generation sector there are multiple sellers but only a
and distribution single buyer. Transmission was effectively a monopoly
infrastructure under NEA but the establishment of the Rashtriya
Grid Prasaran Company Limited (RGPCL), and the business as usual mindset. NEA plans
commissioning of the first cross border transmission to transform its organizational structure
project Dhalkebar-Muzzafarpur transmission line, and operational processes to meet the
under a NEA subsidiary company (Power Transmission challenges and opportunities that will
Company Nepal Limited – PTCNL) implies that there emerge in all three segments of the
will be multiple actors in the transmission sector. business – generation, transmission
Distribution is primarily carried out by NEA but efforts and distribution. In addition, NEA
are already underway to unbundle this vertical into also plans to develop new verticals
seven separate distribution companies mirroring such as trading, consulting and asset
Nepal’s Provincial structure. Furthermore, trade of management to deliver on its vision
electricity in the region has already become an and create value for its shareholders.
important aspect of the electricity market. During the Plan period, NEA will restructure
Punctuating these milestones was the enactment its organizational structure
of the Electricity Regulatory Commission Act which which will transform the electricity
will result in a new regulatory environment that will market from the existing structure (Fig
ensure a more transparent and competitive electricity 5) to the one in Fig 6.
sector. Looking forward, the governing legislations NEA has already started the necessary
and regulations for the sector will be overhauled to preparation to functionally segregate
account for the varying degrees of jurisdiction the along different business verticals and
three tiers of government (Federal, Provincial and will give continuity to this process.
Local) have on the energy sector which will impact A pre-requisite to undertaking this
NEA’s operations and organizational structure. These initiative is the completion of the asset
changes are imminent even as the timing and scope verification and valuation exercise that
is uncertain. is currently underway. This exercise will
Re-organizing NEA’s corporate structure is driven be completed in the initial years of the
in part by political imperatives of the new form Plan period and provide the data and
of government but there are also business-based information required to complete the
reasons to embark on the path towards a more functional separation in a meaningful
efficient and responsive NEA. Lessons gleaned way.
from NEA’s mis-steps – lack of accountability and We will begin the process by functional
delegation of authority, inefficient decision making, segregation. Each functional unit will be
lack of planning, inadequate investment in the allocated responsibility and delegated
development of its network and human capital, the requisite authority to operate
politicization of its workforce - over the last couple independently. This will be followed
of decades makes a strong case for re-structuring by financial separation wherein the
54 NEPAL ELECTRICITY AUTHORITY functionally segregated business units
its organization and operations. A key will have their own financial statements.
shortcoming of the current corporate Following satisfactory outcome on the
organization is that decision making functional and financial segregation,
has been inefficient and has resulted we will undertake the institutional
in significant costs to the NEA, both segregation with the formation
financially and to its reputation. A of wholly and/or partially owned
root cause for this has been that subsidiary companies of NEA for each
responsibility has been concentrated functional unit. NEA will essentially
at the very highest level without morph into a holding company and
the requisite delegation of authority retain a few but critical functions such
down the organization and the reorganization as transmission and system operation,
of NEA will take these into planning and investment, and
account. management of its companies.
NEA will adopt a pro-active strategy More specifically the restructuring of
and begin the restructuring initiatives the business verticals will be executed
to meet the new challenges and in the following manner:
opportunities the evolving political Ministry of Energy, Irrigation and Water Resources
and electricity market dynamics will (MoEWRI)
demand. Restructuring a vertically NEA
integrated utility is a multi-year Subsidiary
process and NEA will employ a twostep Gen Cos
approach to implementing this NEA
initiative: Subsidiary
1. Re-Organization during the Plan (PTCN)
Period GoN
2. Re-Organization beyond the Plan Subsidiary
Period VUCL, HIDCL
6.2 RE-ORGANIZATION GoN
DURING THE PLAN Subsidiary RGPCL
PERIOD. IPPs
With the changing political context Generation
and the dynamic electricity market that Imports
is emerging in Nepal and the region, Nepal Power
NEA cannot afford to operate with the Trading Co.
NEA through loss reduction
Transformer Co. and revenue collection to
NEA Tower position the distribution
& Pole Co. companies to be
NEA sustainable and viable.
Engineering Co. We will also begin developing
NEA profit and loss statements for each
Generation regional/provincial center. During
Transmission this period NEA will put into motion
Distribution the process for each regional/
Electricity Regulatory provincial distribution centers to
Commission (ERC) compile their financial statements.
Department of Electricity These efforts will be synchronized
Development (DoED) with the asset verification exercise
Water and Energy which is expected to conclude at the
Secretariat (WECS) end of Year 3 of the Plan Period. We
LICENSED AND REGULATED ENTITIES POLICY AND expect this process to be an iterative
REGULATORY one and NEA will re-assess the
AUTHORITIES regional offices capacity to operate
GENERATION autonomously and adjust resource
TRANSMISSION allocation accordingly.
DISTRIBUTION 2. Plan Year 4-5: The conclusion
OTHERS of the asset verification along
FIGURE 5: Current Electricity Market Overview with the functional and financial
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 separation envisaged above, will
55 allow for the regional/provincial
DISTRIBUTION distribution companies to operate
The NEA Board has provided direction as financially independent and
to separate the distribution business accountable entities. Based on the
into seven companies demarcated financial situation of the individual
along the provincial borders. During regional/provincial distribution
the Plan period, NEA will first separate centers, NEA will develop a plan
the distribution business into seven to ensure the financial viability of
autonomous functional units along each distribution center. During
provincial borders and then transition Year 4 of the Plan Period, NEA
into separate companies wholly owned will establish each regional/
by NEA. The two-step process (detailed provincial distribution center as a
below) will allow the distribution separate company with 100% NEA
units to operate independently and ownership. The relevant assets will
leverage the managerial and technical be transferred to the distribution
capacity of NEA. This will have twin companies and beginning in Year
benefits of reducing transactional costs 5 of the Plan Period, NEA will hand
while allowing these units to improve over the distribution companies to
institutional governance and capacity the provincial companies on terms
as they transition from functionally and conditions defined by the
autonomous units to financially and Government of Nepal.
structurally independent companies. FIGURE 6: Nepal Electricity Market Overview after Re-
1. Plan Year 2-3: During this period, structuring in the Plan Period
NEA will establish regional offices GENERATION
and endow them with the requisite TRANSMISSION
capacity and resources to function DISTRIBUTION
as autonomous distribution entities. OTHERS
These initiatives will include Ministry of Energy, Irrigation and Water Resources
developing and augmenting the (MoEWRI)
technical, operational, financial NEA
and management capacities of Subsidiary
the regional/provincial distribution Gen Cos
centers. NEA
During this period, NEA Subsidiary
will continue initiatives (PTCN)
to achieve 100% access GoN
to electricity services and Subsidiary
improve the operational VUCL, HIDCL
and technical capacity of GoN
its distribution centers. Subsidiary
NEA will accelerate the RGPCL
installation of smart meters, IPPs Imports
automate distribution NEA
operations, increase Engineering Co.
operational efficiency P1
DisCom of NEA owned generation projects (that
NEA Power were financed on NEA’s balance sheet)
Trading Co. currently operate as part of the NEA’s
P2 vertically integrated structure. During
DisCom the Plan period NEA will undertake the
NEA following activities to re-organize its
Transformer Co. operational generation assets:
P3 1. Plan Year 2-3: NEA will conduct
DisCom an exploratory study to spinoff
NEA Tower its generation assets into a
& Pole Co. separate generation company, NEA
P4 Generation Company (NEA GenCo).
DisCom The study will assess the financial
P5 viability of the generation assets at
DisCom the individual level and collectively
P6 for NEA GenCo. Furthermore, the
DisCom study will outline the roadmap
P7 to spin-off NEA GenCo. During
DisCom this period, NEA will initiate the
NEA Gen Co. process of functional and financial
Electricity Regulatory separation by maintaining separate
Commission (ERC) book of accounts of the operational
Department of Electricity generation assets so that they
Development (DoED) operate as a stand-alone entity.
Water and Energy 2. Plan Year 4-5: Following the
Secretariat (WECS) conclusion of the asset verification
LICENSED AND REGULATED ENTITIES POLICY AND and valuation exercise, NEA will
REGULATORY initiate and conclude the spinoff
NEA Trans of NEA GenCo as a separate
& SO Co entity during Plan Years 4 and 5.
56 NEPAL ELECTRICITY AUTHORITY NEA GenCo will operate as an
The distribution independent company and will
companies will be the sign PPA/PSA agreement with NEA
primary interface with that will incentivize NEA GenCo
the customers and to optimize costs and increased
will be responsible for operational efficiency.
developing, operating FIGURE 7: Market Design After Re-structuring during the
and maintaining the Plan Period
distribution infrastructure CSA – Credit Support Agreement; PSA – Power Sales
and ensuring quality and Agreement; TSA – Transmission Services Agreement
reliable service. Initially the CSA
distribution companies TSA
will procure power from its PSA PSA
parent company NEA, and PSA
later from Nepal Power NEW
Trading Company (NPTC). PPAs
Corporate KPIs related LEGACY
to distribution, universal PPAs
access to electricity, Nepal Power
quality of power and Trading Co.
financial sustainability will NEA Gen Co.
be passed along to the P1 DisCom P2 DisCom P3 DisCom P4 DisCom P5 DisCom
heads of these companies. P6 DisCom P7 DisCom
GENERATION NEA Subsidiary
In the generation segment, NEA Gen Cos.
will align its operations along two NEA Subsidiary
verticals, development and operation. Gen Cos
On the development vertical, all new IPPs
generation projects that NEA develops Generation
will be structured through subsidiary IPPs Generation GoN Subsidiary
companies. The model has clearly been VUCL, HIDCL
demonstrated as a success story and NEA Hold Co
will be given continuity. This company (Transmission & System
model of development has allowed Operation)
NEA to achieve the benefits of private PTCN GON Subsidiary
sector ingenuity, discipline and efficient RGPCL
decision making while ensuring greater Imports
accountability, transparency and focus CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
on profitability. 57
On the operational side, the 508 MWs TRANSMISSION,
SYSTEM OPERATION the border with its neighbors. The
Following the spin-off of its generation establishment of NPTC means
and distribution businesses as that trading will become a new
subsidiaries of NEA, NEA as we know it business vertical for NEA which will
today will be a holding company with play an important role in balancing
the development and operation of demand and supply and foster the
the transmission system constituting development of a multi-buyer multiseller
its core assets and functions. It will electricity market in Nepal.
be responsible for the development NPTC will be operationalized during
of new transmission lines, operation the Plan period as an independent
of the grid and maintenance of trading company and potentially
the transmission infrastructure. The position it to be the counterparty
transmission sector will essentially to PPAs with generation companies,
be a monopoly. NEA will continue with support from NEA until such
to explore the development of the time it is required to give comfort to
transmission sector through subsidiary counterparties.
companies wholly owned by NEA 2. Other Subsidiaries
or through joint ventures as was NEA will continue its efforts to
done in the development of the extract value from its assets –
Dhalkebar-Muzzafarpur cross border physical, human and intellectual
transmission line. The Rashtriya Grid to create value for its shareholders,
Prasaran Company Ltd., a government reduce the cost of supply and
owned subsidiary, will collaborate improve the quality, reliability
with NEA in its transmission planning and safety of electricity. NEA has
and development functions and add established subsidiary companies to
to the diversity and dynamism of the deliver goods and services beyond
transmission business. its core offering of electricity. It will
During the Plan Period, continue to expand its consulting
NEA will undertake the and engineering service business
necessary initiatives to through the NEA Engineering
position its transmission Company (NECo) and position it
and system operations to as the pre-eminent consulting
be spun-off as a separate company in the country and the
entity after the Plan Period. region. It will also fully operationalize
On the technical front, automating the NEA Tower and Pole Company
substation operations, modernizing (NTPC) and the NEA Transformer
the dispatch operations and enabling Company (NTC) and explore
it to operate seamlessly to enable strategic partnerships or joint
trading with regional countries will ventures to grow these businesses.
be some of the activities that will be Maximizing the value and utilization
undertaken leading up to spin-off of of NEA’s assets, particularly its land
the transmission and system operation holdings and wide network of
function. On the institutional side, offices across the country will be
NEA will set up separate financial an area of focus. NEA will explore
accounts of this business and build the establishment of an asset
the managerial capacity of the unit to management company, NEA Asset
function as an independent entity. Management Company (NAMCO) to
OTHER SUBSIDIARY extract the maximum value.
COMPANIES 6.3 RESTRUCTURING
NEA through its ownership stakes in its BEYOND THE PLAN
wholly and partially owned subsidiary PERIOD
companies in generation, transmission With the restructuring of NEA’s
and distribution will be responsible for generation and distribution functions
investment planning and management as separate companies completed
for energy infrastructure development. during the Plan Period, NEA will
NEA will manage, supervise and primarily function as a transmission
provide expertise (technical, managerial utility fulfill planning and investment
and operational) to its subsidiary and functions. In addition, NEA will also
wholly owned companies. have ownership interests in various
1. Trading Company subsidiary companies in the generation
A key feature of the electricity and distribution businesses. The need
market going forward will be the for two transmission entities, NEA
increasing role of trading. In fact, and RGPCL, overseeing transmission
trade of electricity has been a development and operation functions
key piece of NEA’s operations in will no longer be necessary. To remove
balancing electricity demand and these redundancies and optimize
supply. NEA has established the the transmission related functions,
Nepal Power Trading Company NEA will complete the final piece of
(NPTC) with the mandate to trade the restructuring process after the
electricity within Nepal and across conclusion of the Plan Period. NEA will
spin-off its transmission and system Electricity Regulatory
operation business as NEA TransCo and Commission (ERC)
merge RGPCL’s assets and operations NEA Hold Co (Planning, Monitoring & Investment)
into this entity. Department of Electricity
The remaining entity, NEA HoldCo, will Development (DoED)
be structured as a holding company. Water and Energy
NEA Hold Co will continue to be a Secretariat (WECS)
crucially important actor in the sector LICENSED AND REGULATED ENTITIES POLICY AND
58 NEPAL ELECTRICITY AUTHORITY REGULATORY
and play an important role in the FIGURE 8: Possible Nepal Electricity Market Overview After
development of a robust and vibrant Further Re-structuring beyond the Plan Period
electricity sector. NEA Hold Co, through GENERATION
its web of holding companies and TRANSMISSION
assets will be the conduit through DISTRIBUTION
which power from legacy PPAs OTHERS
and NEA’s own generation will be FIGURE 9: Market Design After Further Re-structuring
allocated to the provincial distribution beyond the Plan Period
companies. NEA Hold Co will provide CSA
the necessary credit support to NPTC TSA
to provide comfort to developers and PSA
financiers. But most importantly, the TSA
restructuring will unleash tremendous PSA
value for its shareholders and create PSA
the right environment and conditions NEW
to open opportunities for ownership in PPAs
NEA to the broader public as mandated LEGACY
in the NEA Act 2041. PPAs
Ministry of Energy, Irrigation and Water Resources Nepal Power
(MoEWRI) Trading Co.
NEA NEA Gen Co.
Subsidiary P1 DisCom P2 DisCom P3 DisCom P4 DisCom P5 DisCom
Gen Cos P6 DisCom P7 DisCom
PTCN Cross NEA Subsidiary
Border 2 Gen Cos.
Cross NEA Subsidiary
Border 3 Gen Cos
Cross IPPs
Border 3 Generation
GoN IPPs Generation GoN Subsidiary
Subsidiary VUCL, HIDCL
VUCL, HIDCL NEA Hold Co
IPPS Imports (Panning & Monitoring
NEA & Investment)
Engineering Co. NEA Trans
P1 & SO Co
DisCom HANDOVER Imports
NEA Power CSA – Credit Support Agreement; PSA – Power Sales
Trading Co. Agreement; TSA – Transmission Services Agreement
P2 CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
DisCom 59
NEA FIGURE 10: Restructuring Milestone Timelines
Transformer Co. FISCAL YEAR 2018/19 2019/20 2020/21 2021/22 2022/23
P3 2023/24 2024/25
DisCom Restructuring Timeline
NEA Tower Enabling Activities
& Pole Co. Asset verification and valuation
NEA Assest Capacity assessment and enhancement
Mgmt. Co. Generation
P4 Exploratory Study of asset divestiture (spin-off)
DisCom Functional and financial separation of assets
P5 Spin-off Generation Company
DisCom Generation Company begins independent operations
P6 Transmission and System Operations
DisCom Functional and financial separation of assets
P7 Modernize dispatch
DisCom Automate sub-stations
NEA Distribution
Gen Co. Establish Regional Offices (ROs)
NEA Financial segregation of ROs
Trans & So Co. Establish ROs as wholly owned NEA subsidiaries
Transfer to ownership of subsidiaries to Provincial not be successful if it simply emanates
Governments from the boardroom and resides
Power Trade Company in the minds and file cabinets of a
Establish Nepal Power Trade Company (NPTC) select few members of Management.
Operationalize NPTC Management will undertake a
Other subsidiaries comprehensive communication
Explore the establishment of NEA Asset Management campaign to raise awareness about the
Company Plan and engage the collective effort of
Empower NEA Engineering Company to expand consulting their respective departments to achieve
services departmental and corporate goals. All
Extract value from ancillary assets employees will need to know what The
Post Plan Phase Plan is, understand its rationale, and be
Transmission and system operator spinoff committed to its successful outcome.
60 NEPAL ELECTRICITY AUTHORITY Furthermore, the communication will
STRATEGIC PLAN be a continuous two-way process
IMPLEMENTATION throughout the Plan Period.
AND MONITORING 7.1.2 CONTINUOUS
FRAMEWORK MANAGERIAL OVERSIGHT
7. NEA operates in a fluid and dynamic
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 environment and a key aspect of
61 the Implementation Strategy for the
The CDP constitutes a roadmap for Plan will be to ensure relevance of
achieving NEA’s strategic objectives the Plan’s goals and objectives on an
and goals over the next five years. ongoing basis. There will need to be
The Board of Directors will provide a continuous process of review and
strategic input and guidance for the refinement. Management will develop
effective implementation of the Plan appropriate and relevant reporting
but the responsibility and execution of tools and mechanisms to continuously
the Plan itself will be the responsibility review progress on the implementation
of the Senior Management Team of the Plan to ensure timely attainment
(Management) of NEA under the of goals and continued alignment with
Managing Director’s leadership. GoN’s policy objectives. Specifically,
NEA operates in a fluid and rapidly evolving political, Management shall:
regulatory and economic environment that reflects n Undertake quarterly and annual
Nepal’s emergence as a newly formed federal review on the implementation of the
republic. The Plan is intended to be a dynamic, living Plan and submit progress reports;
document and the strategies herein will be adapted n Revise and update the Plan when
and modified in response to the realities as they necessary to align and adapt to the
emerge. The Plan will be adapted within any Plan year changing circumstances and GoN
as and when necessary to respond in a manner that priorities;
is relevant and effective. Updates to the Plan targets n Undertake a mid-term and end-ofterm
and priorities will be managed and agreed between review of the Plan to not only
the Board and the Management. determine success but also lessons
62 NEPAL ELECTRICITY AUTHORITY learned;
7.1 IMPLEMENTATION n Automate monitoring and
STRATEGY evaluation of implementation of
The Activity Matrix outlined in the the Plan to improve efficiency in
Section 8 provides a framework that reporting and analysis.
translates NEA’s vision, mission and 7.2 PERFORMANCE
goals into a detailed and actionable MONITORING
plan with performance tracking AND REPORTING
that includes specific tasks and its STRUCTURE
associated timelines and department/ The implementation of the Plan will
key person(s) responsible. However, be the responsibility of the MD’s
the implementation of the Plan office supported by the Planning and
will require a comprehensive Monitoring Directorate. While the
implementation strategy along with Plan outlines goals and objectives
an effective communication plan to at the Senior Management and
develop awareness and ownership Directorate/Department level, it will
by all employees and continuous be implemented by the effective
oversight and management of the cascading of the Plan’s activities and
Plan’s implementation. Following goals. During the implementation of
the approval of the Plan by the the Plan, the Activity Matrix will be
Board, Management will produce a further detailed to assign responsibility
comprehensive and detailed CDP down to the group/individual level
Implementation Action Plan. to the extent possible. Accountability
7.1.1 COMMUNICATION for the performance and attainment
AND OWNERSHIP ACROSS of the Plan’s goals will be cascaded
THE ORGANIZATION in alignment with the organizational
The implementation of the Plan will structure as follows:
n Corporate KPIs and targets will be set Number of domestic customers making online payments (in
at the Board level in alignment with thousands) 300 400 700 1000 1500 2000
annual Performance Contracts of the Office & Management (O&M) Survey completed Complete
MD and Senior Management; 3. Improve Customer Service
n The Corporate KPIs will reflect GoN’s Increase in employee efficiency (Sales per employee in NPR
and NEA’s objectives; Millions) * 5.5 6.75 8.57 11.25 14.07 15.98
n The Corporate KPIs and any Complaint Handling Report generated Annually Yes Yes Yes
additional high priority KPIs will be Yes
assigned to the MD to which the MD STRATEGIC PERFORMANCE MEASURES 2017/18
is accountable and will be linked to 2018/19 2019/20 2020/21 2021/22 2022/23
the MD’s performance contract; 64 NEPAL ELECTRICITY AUTHORITY
n All the KPIs in the corporate and ACTIVITY
MD’s performance contracts will be MATRIX
cascaded to the relevant directorate 8.
and functional heads and cascaded CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
down to management staff with 65
reference to their specialized GOAL 1: Expand & Upgrade System Capacity to Generate,
contributions; Transmit & Distribute 5,000 MW
n Corporate KPIs will also be Increase domestic Total Generation capacity 233 1,147
disaggregated based on geography 1,017 641 1,080
(regional/provincial, district) and generation capacity (annual additions in MW)
specific projects with targets Independent Power Producers PMITD 149 463 880 511 740
customized to each level and NEA: own generation GD 74 - - - -
organizational unit. NEA: Subsidiary companies NSCMD - 624 37 - 140
7.3 KEY Solar GD 10 60 100 130 200
PERFORMANCE Thermal GD - - - - -
INDICATORS (KPIS) Increase and enhance Prepare a Five-year Transmission
The KPIs considered most relevant SPD-PMITD, TD Complete
to the Strategic Themes of National transmission capacity System Plan
Priorities, Smart, Modern and Capable C-km of 400 kV T-lines TD - 570 - -
Utility and Improve Customer Service C-km of 220 kV T-lines TD - 298 - 271 166
are outlined in the Table 19. These KPIs C-km of 132 kV T-lines TD - 684 480 518 675
will be tracked and evaluated against C-km of 66 kV T-lines TD - - - -
yearly targets to determine the success 400 kV substations capacity (MVA) TD - 2858.40 - -
in achieving the Plan’s targets on a 220 kV substations capacity (MVA) TD - 30 - 1300 435
short-term and medium-term basis. 132 kV substations capacity (MVA) TD - 345 547 438 432
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 66 kV substations capacity (MVA) TD - - - -
63 ACTIVITIES KEY PERFORMANCE INDICATORS
7.3.1 KEY PERFORMANCE INDICATORS FOR RESPONSIBILITY ANNUAL TARGETS
MONITORING AND EVALUATION 18/19 19/20 20/21 21/22 22/23
TABLE 20: Key Performance Indicators for Monitoring and 8.1 THEME 1: NATIONAL PRIORITIES
Evaluation 66 NEPAL ELECTRICITY AUTHORITY
* based on 10,000 employees in the beginning of plan period Increase and enhance Distribution Master Plan developed
and 5% growth in employee base each year DCSD Complete
1. National Priorities distribution capacity Province 1
Total Generation Capacity (annual additions in MW) 1,074 Addition of 132/33kv s/s capacity DCSD 98 98 98 98 98
233 1,147 1,017 641 1,080 (MVA)
Total Generation Capacity (cumulative in MW) 1,074 1,307 Addition of 132/66/11kv s/s capacity DCSD 29 29 29 29 29
2,454 3,471 4,112 5,192 (MVA)
% of Demand met by domestic generation 63.4% 97% 100% Province 2
100% 100% 100% Addition of 132/33kv s/s capacity DCSD 85 85 85 85 85
Per Capita Generation of Electricity (kWh) 150 278 356 517 (MVA)
677 763 Addition of 132/66/11kv s/s capacity DCSD 50 50 50 50 50
Per Capita Consumption of Electricity (kWh) 200 287 342 (MVA)
400 458 496 Province 3
Number of Customers connected to INPS (‘000) 4,051 4,451 Addition of 132/33kv s/s capacity DCSD 25 25 25 25 25
4,851 5,251 5,651 6,051 (MVA)
Percentage of Local Governments fully electrified 65% 72% Addition of 132/66/11kv s/s capacity DCSD 174 174 174 174
80% 90% 95% 100% 174
2. Capable, Modern and Smart Utility (MVA)
Total AT&C Losses 20.45% 18.85% 17.00% 16.00% 15.00% Province 4: Gandaki
14.40% Addition of 132/33kv s/s capacity DCSD 12 12 12 12 12
Increase System Load Factor 68% 70% 71.5% 73% 74% (MVA)
75% Addition of 132/66/11kv s/s capacity DCSD 14 14 14 14 14
Nepal Financial Reporting Standards Implemented Complete (MVA)
Enterprise Resource Planning Software Implemented Province 5
Complete Addition of 132/33kv s/s capacity DCSD 110 110 110 110
% of billed energy measured by Smart / Automated Meters 110
15% 30% 45% 60% 75% (MVA)
Addition of 132/66/11kv s/s capacity DCSD 46 46 46 46 46
(MVA) C-km of 400/230 V lines DCSD 750 750 500 500 500
Province 6: Karnali 33 kV substations capacity (MVA) DCSD 60 60 80 80 80
Addition of 132/33kv s/s capacity DCSD 12 12 12 12 12 No. of Transformers DCSD 250 250 334 334 334
(MVA) Province 3
Addition of 132/66/11kv s/s capacity DCSD 5 5 5 5 5 C-km of 33 kV lines DCSD 13 13 13
(MVA) C-km of 11 kV lines DCSD 67 67 67
Province 7: Sudurpaschim C-km of 400/230 V lines DCSD 200 200 200
Addition of 132/33kv s/s capacity DCSD 24 24 24 24 24 33 kV substations capacity (MVA) DCSD 11 11 11
(MVA) No. of Transformers DCSD 67 67 67
Addition of 132/66/11kv s/s capacity DCSD 10 10 10 10 10 ACTIVITIES KEY PERFORMANCE INDICATORS
(MVA) RESPONSIBILITY ANNUAL TARGETS
Increase and enhance Dhalkebar SS charged at full capacity 18/19 19/20 20/21 21/22 22/23
TD 400 kV 68 NEPAL ELECTRICITY AUTHORITY
cross-border Commissioning of New Butwal – TD Complete Province 4: Gandaki
infrastructure Sunauli – Gorakhpur 400 kV C-km of 33 kV lines DCSD 62 62 61 61 61
Begin construction of Inaruwa – TD Begin C-km of 11 kV lines DCSD 250 250 267 267 267
Jogbani – Purniya 400 kV C-km of 400/230 V lines DCSD 750 750 800 800 800
Rasuwagadhi – Chilime HUB – TD Finalize 33 kV substations capacity (MVA) DCSD 24 24 25 25 25
Ratmate 400 kV Modality No. of Transformers DCSD 250 250 267 267 267
Attariya – Bareilly TD Begin Province 5
Arun III – Dhalkebar – Muzzafarpur Dev: SJVC Complete C-km of 33 kV lines DCSD 109 109 97 97 97
Upper Karnali – Lamki – Bareilly Dev: GMR Begin C-km of 11 kV lines DCSD 500 500 600 600 600
ACTIVITIES KEY PERFORMANCE INDICATORS C-km of 400/230 V lines DCSD 1500 1500 1800 1800 1800
RESPONSIBILITY ANNUAL TARGETS 33 kV substations capacity (MVA) DCSD 66 66 82 82 82
18/19 19/20 20/21 21/22 22/23 No. of Transformers DCSD 500 500 600 600 600
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 Province 6: Karnali
67 C-km of 33 kV lines DCSD 28 28 168 168 168
GOAL 2: Increase per Capital Electricity Consumption to C-km of 11 kV lines DCSD 100 100 600 600 600
700 kWh C-km of 400/230 V lines DCSD 300 300 1800 1800 1800
Build institutional Per capita consumption of electricity 287 33 kV substations capacity (MVA) DCSD 8 8 35 35 35
342 400 458 496 No. of Transformers DCSD 100 100 600 600 600
capacity to increase (kWh) Province 7: Sudurpaschim
per capita electricity Per capita production of electricity 278 C-km of 33 kV lines DCSD 151 151 41 41 41
356 517 677 763 C-km of 11 kV lines DCSD 650 650 200 200 200
usage (kWh) C-km of 400/230 V lines DCSD 1950 1950 600 600 600
Business Development Directorate MDS Complete 33 kV substations capacity (MVA) DCSD 52 52 14 14 14
formed No. of Transformers DCSD 650 650 200 200 200
Demand Stimulation Action Plan BDD, PMITD Begin ACTIVITIES KEY PERFORMANCE INDICATORS
developed and implemented RESPONSIBILITY ANNUAL TARGETS
Prepare TOD and Tariff Analysis conducted, Time of Day 18/19 19/20 20/21 21/22 22/23
EAD-PMITD Complete Update Update Update * NOTE: No. of consumers includes 500,000 customers of
seasonal tariff and Seasonal tariffs recommended to Community Sales
strategies increase off-peak energy usage Contd... Universal Access to Electricity
Liaise with government Policy recommendations provided to CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
EAD-PMITD, BDD Complete 69
agencies to electrify the MoEWRI, MoF, MoICS and MoPIT GOAL 4: Improve Nepal’s Energy Security
economy and increase Increase Nepal’s National demand met through PMITD, GD,
electricity usage BDD 97% 100% 100% 100% 100%
ACTIVITIES KEY PERFORMANCE INDICATORS electricity generation domestic generation
RESPONSIBILITY ANNUAL TARGETS capacity with special Kulekhani III Storage (14 MW)
18/19 19/20 20/21 21/22 22/23 completed GD Complete
GOAL 3: Universal Access to Electricity focus on PRoR and Upper Tamakoshi PRoR (456 MW) BDD
Percentage of Local Governments CRED, DCSD 72% 80% Complete
90% 95% 100% Storage projects completed
fully electrified Tanahu Storage (140 MW) construction BDD Begin
Build institutional No. of new customers (in thousands) Dudh Koshi Storage (635 MW) BDD Begin
DCSD, MDS-MD 400 400 400 400 400 construction
knowledge and capacity Electricity for All Action Plan DCSD Tamakoshi V PRoR (95 MW) construction BDD Begin
Complete Chainpur Seti PRoR (210 MW) BDD Begin
on electrification needs developed construction
Continue campaign to Province 1 Upper Arun PRoR (725 MW) construction BDD Begin
add new customers C-km of 33 kV lines DCSD 63 63 118 IPP PRoR Completion (MW) PTD-PMITD 14.8 499 37.6 99.4
118 118 Prioritize the Technical preparedness and financing ESD
to the grid C-km of 11 kV lines DCSD 200 200 600 600 600 Complete
C-km of 400/230 V lines DCSD 600 600 1800 1800 1800 development of new for Uttar Ganga Storage (828 MW)
33 kV substations capacity (MVA) DCSD 22 22 62 62 62 projects: PRoR, Technical preparedness and financing for
No. of Transformers DCSD 200 200 600 600 600 ESD Complete
Province 2 Storage, Battery Andhi Khola Storage (180 MW)
C-km of 33 kV lines DCSD 38 38 46 46 46 stations Preliminary investigations of 2500 MW of ESD
C-km of 11 kV lines DCSD 250 250 333 333 333 Begin
projects with peaking / storage capacity CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
Study and define policies / tariffs for PMD, EAD Begin 71
energy storage technologies: GOAL 2: Demand Side Management and Energy Efficiency
utility-scale battery stations Increase System Load Factor TSO-TD 70% 71.5% 73%
Ensure a healthy Required Storage Project targets for PPA 74% 75%
PTD 700 850 1200 1500 Build institutional Peak Load Reduction Plan and Policy
generation mix as signing (MW) (target: 30-35%) EELRD-MD, PMITD Complete
per the White Paper Required PRoR targets for PPA signing capacity to make Developed
PTD 300 800 1000 1500 system more efficient
(MW) (target: 25-30%) Promote measures to Policy recommendations provided to
Required RoR targets for PPA signing PTD 380 630 630 271 EELRD-MD Complete
- make economy more Ministry of Finance to promote energy
(MW) (target: 30-35%) energy efficient efficient electrical appliances
Required alternate sources targets for PTD 100 150 150 189 Provide policy recommendation to EELRD-MD, PMITD
PPA signing (MW) (target: 5-10%) Complete
Market Integration Energy Banking NPTC Begin MoEWRI for the establishment of
Regional Trading NPTC Begin Bureau of Energy Efficiency
ACTIVITIES KEY PERFORMANCE INDICATORS Implement ground water pump EELRD-MD, DCSD 100 300
RESPONSIBILITY ANNUAL TARGETS 300 400 400
18/19 19/20 20/21 21/22 22/23 program (# of pumps)
70 NEPAL ELECTRICITY AUTHORITY Implement pilot smart street light EELRD-MD, DCSD 1000
Total AT&C Losses DCSD, PMD, TD, 18.85% 17.00% 1500 1500 1500
16.00% 15.00% 14.40% program (# of lights)
EELRD-MD Employ Demand Side Tariff rates proposed to encourage
AT&C Losses in Transmission system DCSD, PMD, TD, EAD-PMITD Complete
5.60% 5.40% 5.20% 5.00% 4.80% Management tools to demand during off-peak hours
EELRD-MD clip peak and fill valley TOD tariff also offered to high-end
AT&C losses in Distribution system DCSD, PMD, TD, EAD-PMITD Complete
14.04% 12.26% 11.39% 10.53% 10.08% of load curve domestic customers with Smart
EELRD-MD Meters (3-phase)
Build institutional Distribution Loss Reduction Master DCSD Encourage consumers ICT used to inform customers of peak
Complete EELRD-MD, PRGHS- Informed Informed Informed Informed
capacity to reduce Plan finalized to change behavior and off-peak hours AD, DCSD
losses Distribution Loss Reduction Master DCSD Complete Energy efficiency awareness EELRD-MD, PRGHS-
Plan Phase I implemented in 5 DCs Organized Organized Organized Organized
Implementation of online data EELRD-MD Complete campaign organized AD, DCSD
collection pilot program in 5 ACTIVITIES KEY PERFORMANCE INDICATORS
substations RESPONSIBILITY ANNUAL TARGETS
Develop infrastructure Automated Data Acquisition Plan 18/19 19/20 20/21 21/22 22/23
DCSD, PMITD Complete GOAL 3: Detailed Recording of Accounting Transactions
and system to digitalize completed Identify and separate Nepal Financial Reporting Standards
data acquisition and GIS mapping of distribution DCSD, FD Complete
PMITD 35 35 35 12 Generation, Transmission implemented
generate reports. infrastructure completed (# of DCs) and Distribution assets Debt balances of GTD systems FD
Auto data emitting sensors installed DCSD, PMITD 50 50 17 Complete
and operational in distribution and liabilities separated
infrastructure (# of DCs) Fixed assets and inventory of GTD AD-FD Complete
Auto data emitting sensors installed TD, PMD, systems separated
and operational in all transmission lines ITD-PMITD Implementation of Enterprise Resource AD-FD Complete
Dashboard consisting of day-ahead ITD-PMITD Developed Planning software capable of generating
technical and financial parameters financial statements of business unit
developed and made accessible Determine per unit Separate corporate costs and shared FD
to Management Complete
Invest in system No. of overloaded feeders upgraded DCSD, Generation, Transmission costs allocated to GTD systems
EELRD-MD 75 100 100 100 100 and Distribution Separate interest costs allocated to GTD FD
infrastructure for No. of capacitor banks installed DCSD, Complete
EELRD-MD 350 500 500 500 650 cost of service based on actual and corporate debt
loss reduction allocations
Decrease non- Annual Anti-theft campaign activities DCSD, Distribution costs segregated at the FD Complete
EELRD-MD Published Published Published Published provincial level
Published Create individual financial Plan created to spin off the
technical losses complied and published operations DCSD Complete
Media Campaign to discourage theft DCSD, PRGHS-AD statements for the seven of provincial business units
Conducted Conducted Conducted Conducted Conducted provincial Distribution Individual Balance Sheet and Profit
GOAL 1: Reduce AT&C Losses to under 15% and FD Complete
ACTIVITIES KEY PERFORMANCE INDICATORS Companies / Regional Loss accounts developed
RESPONSIBILITY ANNUAL TARGETS Offices ERP implementation enables FD Complete
18/19 19/20 20/21 21/22 22/23 instantaneous generation of provincial
8.2 THEME 2: CAPABLE, MODERN AND SMART UTILITY business unit’s financial statements
ACTIVITIES KEY PERFORMANCE INDICATORS Exemption acquired from NRB limits on MD, ITD-PMITD
RESPONSIBILITY ANNUAL TARGETS Complete
18/19 19/20 20/21 21/22 22/23 maximum online transactions
72 NEPAL ELECTRICITY AUTHORITY Number of domestic customers making DCSD, ITD-PMITD
GOAL 4: Use of Modern IT systems 200 500 1000 1500 2000
Improve IT policy and IT Policy revised and approved by online payments (in thousands)
NEA ITD-PMITD, MDS Complete ACTIVITIES KEY PERFORMANCE INDICATORS
standards Board RESPONSIBILITY ANNUAL TARGETS
Conduct annual Certified Audit of ITD-PMITD Conducted 18/19 19/20 20/21 21/22 22/23
Conducted Conducted CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
Software, Hardware and Network in 73
operation GOAL 5: Increase Non-tariff Income
Develop a state-of-the- Develop a road map to connect all Increase capacity and Treasury Unit strengthened through
ITD-PMITD Complete MD, FD Complete
art communication branches to Corporate Office mandate of Treasury increased staff and appropriate
network between all DCs connected to Corporate Office ITD- trainings
PMITD 50 100 22 Unit Treasury Unit Scope of Work determined, TD-FD
branches (# of DCs including sub-branches) Complete
Establish a centralized Data Center established and in PMD, and annual income targets set
ITD-PMITD Complete Establish Business Business Development Directorate MD,
Data Center and operation at NEA Corporate Office BDD Complete
back-up system Data Recovery Center established at PMD, Development Directorate established and operationalized
ITD-PMITD Complete to increase income Non-Tariff Income Enhancement Plan
an off-site location BDD Complete
Build IT Capacity of NEA Employee IT Capacity Building completed
Plan ITD-PMITD, AD Complete ACTIVITIES KEY PERFORMANCE INDICATORS
employees developed RESPONSIBILITY ANNUAL TARGETS
IT Capacity Building trainings ITD-PMITD, AD 10 60 93 18/19 19/20 20/21 21/22 22/23
conducted (# of budget centers) GOAL 6: Improve employee benefits, productivity and
Refresher Training conducted ITD-PMITD, AD 10 60 93 human resource planning
(# budget centers) Improve human Office & Management (O&M) Survey HRD-
IT Capacity Building trainings ITD-PMITD, AD Complete AD Complete
conducted for all NEA Directorates resource planning conducted
Refresher Course conducted for all NEA ITD-PMITD, AD Job Descriptions and required HRD-AD Complete
1000 1000 1000 qualifications for all positions developed
Directorates (# of people) Capacity Building Plan developed and HRD-AD Developed
Develop infrastructure Automated Data Acquisition Plan Begin
DCSD, PMITD Complete implemented
and system to digitalize completed Additional resources provided to Finance, HRD-AD Begin
data acquisition and GIS mapping of distribution DCSD, Analysis, Planning and Technology
PMITD 30 40 50 52 departments
generate reports infrastructure completed (# of DCs NEA Training Center revived, and new HRD-AD Begin
including sub-branches) courses offered
Auto data emitting sensors installed DCSD, PMITD 40 50 82 Enhance employee Salary and Employee Benefit Survey
and operational in distribution HRD-AD Complete
infrastructure (# of DCs including benefits and safety conducted
sub-branches) Safety at the workplace trainings DCSD, 60 100 100 100
Auto data emitting sensors installed TD, PMD, ITD-PMITD conducted (# of DCs, sub-stations, SMD-EELRD
Complete generation projects, etc.)
and operational in all transmission lines ACTIVITIES KEY PERFORMANCE INDICATORS
Dashboard consisting of day-ahead ITD-PMITD Developed RESPONSIBILITY ANNUAL TARGETS
technical and financial parameters 18/19 19/20 20/21 21/22 22/23
developed and accessible Modernize internal Online migration of Human Resources
Implement Enterprise ERP Software procured ITD-PMITD HRD-AD, Complete
Complete communications and and Inventory records ITD-PMITD
Resource Plan (ERP) Nine modules incorporated in ERP record keeping Communication between NEA AD, ITD-
ITD-PMITD Complete PMITD Complete
Software and operationalized employees migrated to
Trainings conducted to make ITD-PMITD Conducted Intranet/email/SMS
Conducted Internal approvals conducted through AD, ITD-PMITD
employees proficient in ERP use Complete
Develop automated % of billed energy measured by DCSD Intranet
15% 30% 45% 60% 75% Operationalization of online library of AD, ITD-PMITD
billing and payment Smart / Automated Meters Complete
system infrastructure Bill delivery via SMS and email research, studies, reports and documents
enabled DCSD, ITD-PMITD Complete ACTIVITIES KEY PERFORMANCE INDICATORS
Multiple payment options (bank DCSD, ITD-PMITD RESPONSIBILITY ANNUAL TARGETS
Complete 18/19 19/20 20/21 21/22 22/23
transfers, credit cards, mobile payments, Contd... Use of Modern IT systems
etc.) options offered to customers 74 NEPAL ELECTRICITY AUTHORITY
GOAL 7: Re-brand NEA as a Modern Corporate entity provided to concerned officers
Build institutional Publish Relations and Grievance MDS, AD Improve coordination Identification of major issues with
Complete MDS, GD, TD, Complete
capacity for Handling Section established and with various GoN Project Implementation DCSD
Communications and operationalized agencies Focal persons appointed for different MDS, GD,
Outreach Communication Strategy developed PRGHS-AD TD, Complete
Complete Ministries DCSD
Re-branding Action Plan implemented PRGHS-AD Begin Legislative changes recommended for MDS, GD, TD,
Complete Complete
Increase Media campaign conducted with PRGHS-AD Begin quicker implementation of projects DCSD
Communications and Brand Ambassador(s) ACTIVITIES KEY PERFORMANCE INDICATORS
Outreach activities Increase media presence PRGHS-AD RESPONSIBILITY ANNUAL TARGETS
Begin Increased Increased Increased 18/19 19/20 20/21 21/22 22/23
Local/national teams, events sponsored PRGHS-AD Begin GOAL 11: Establish and operationalize a well-resourced
Continue Continue Continue Business Development Directorate
ACTIVITIES KEY PERFORMANCE INDICATORS Establish a well- Operationalize a well-resourced BDD MD,
RESPONSIBILITY ANNUAL TARGETS BDD Complete
18/19 19/20 20/21 21/22 22/23 resourced BDD BDD Tasks and Mandate formalized BDD
GOAL 8: Preparedness for Regulatory requirement Complete
Increase institutional Dedicated core team formed to EAD- Non-Tariff Income Enhancement Plan BDD Complete
PMITD Formed completed
capacity to file annual collect, analyze and prepare data Develop long-terms NEA Subsidiary Investment Plan BDD
tariff petitions required for filing tariff petitions Complete Updated Updated
Capacity building trainings provided to EAD-PMITD plans of NEA Subsidiaries developed and updated annually
Complete NEA Subsidiary Dividend projections BDD Complete
Committee members on tariff Updated Updated
calculation and petitions developed and updated annually
Determine scientific Detailed Tariff study conducted with the New NEA Subsidiary Pipeline Report BDD Complete
EAD-PMITD Begin Complete Updated Updated Updated Updated
and pragmatic tariff view to encourage consumption, reduce developed and updated annually
peak load as well as protect lifeline tariff Quarterly Monitoring Compile quarterly reports of BDD
File annual tariff petitions to the EAD-PMITD Filed Filed Compiled Compiled Compiled
Filed Filed and Reporting Subsidiary progress
Regulator ACTIVITIES KEY PERFORMANCE INDICATORS
ACTIVITIES KEY PERFORMANCE INDICATORS RESPONSIBILITY ANNUAL TARGETS
RESPONSIBILITY ANNUAL TARGETS 18/19 19/20 20/21 21/22 22/23
18/19 19/20 20/21 21/22 22/23 GOAL 12: Improve safety and ensure compliance of
GOAL 9: Operationalize a Competent Trading Company technical standards
Establish a well- Operationalize a well-resourced NPTC Increase institutional Safety Management Division
NPTC, MD Complete established MD, EELRD Complete
resourced NPTC NPTC Business Plan developed NPTC capacity to improve and operationalized
Complete safety and ensure Contract, Norms and Specifications MD,
Begin Banking Electricity Energy Banking agreement signed PMITD Complete
NPTC / PTD-PMITD Signed compliance of technical Department established and
with neighboring Energy Banking initiated NPTC/PTD- standards operationalized
PMITD Initiated Continued Continued Continued Safety, Generation, Transmission and CNSD-PMITD
countries Complete
Begin trading of Electricity traded with India on day Distribution Standards amended
NPTC/PTD-PMITD Begin Continued Continued Continued Audit for compliance of Audit of Technical and Safety
Continued Standard TAD-IAD 5 100 100 100
electricity ahead and term ahead markets Technical and Safety compliance (# of DCs, sub-stations,
Regional trading of electricity NPTC/PTD-PMITD Begin Standards generation projects, etc.)
Competitive bidding of PPAs procured via competitive Follow-up audit to verify fulfillment of TAD-IAD 5 100 100
bidding NPTC/PTD-PMITD Begin audit compliance report (# of DCs, substations,
PPAs process generation projects, etc.)
ACTIVITIES KEY PERFORMANCE INDICATORS ACTIVITIES KEY PERFORMANCE INDICATORS
RESPONSIBILITY ANNUAL TARGETS RESPONSIBILITY ANNUAL TARGETS
18/19 19/20 20/21 21/22 22/23 18/19 19/20 20/21 21/22 22/23
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23 76 NEPAL ELECTRICITY AUTHORITY
75 Contd... Improve safety and ensure compliance of technical
GOAL 10: Improve Contract and Project Management standards
Improve Contract Identification of major issues with MDS, Safety Awareness Consumer Safety Awareness Campaign
GD, TD, Complete SMD-EELRD, Complete Implement Implement Implement
Management abilities Contract Management DCSD Public Campaign developed and implemented PRGHS-AD
Contract Management Improvement MDS, GD, TD, Capacity building of Safety at the workplace trainings SMD-
Complete Implement Implement Implement EELRD, 60 100 100 100
Action Plan developed and implemented DCSD employees to reduce conducted (# of DCs, sub-stations,
Contract Management Training AD, MDS Developed HRD-AD, DCSD
developed workplace accidents generation projects, etc.)
Contract Management Training HRD, AD Provided
ACTIVITIES KEY PERFORMANCE INDICATORS
RESPONSIBILITY ANNUAL TARGETS
18/19 19/20 20/21 21/22 22/23
GOAL 1: Supply reliable, affordable, high-quality and safe
electricity
GOAL 2: Use of Information Communication Technology to
Improve Customer
* based on 10,000 employees in the beginning of plan period
and 5% growth in employee base each year
Ensure adequate Expand and upgrade system capacity
BDD, GD, TD, 233 1,147 1,017 641 1,080
electricity supply with to generate, transmit and distribute
PMD, DCSD
reliability, quality and 5000 MW
safety New cross-border connections TD, BDD Dhalekbar
Butwalestablished,
and existing connections substation Gorakhpur
augmented charged line
at 400kV complete
Safety, Generation, Transmission and CNSD-PMITD
Complete
Distribution Standards amended
Provide affordable Reduce AT&C losses to reduce cost of
DCSD, PMD, TD, 18.85% 17.00% 16.00% 15.00% 14.40%
electricity supply of electricity EELRD
Business Development Department EAD, FD, BDD Begin
established and implementation of
Non-Tariff Income Enhancement Plan
Increase in employee efficiency (Sales HRD 6.75 8.57 11.25
14.07 15.98
per employee in NPR Millions)*
ACTIVITIES KEY PERFORMANCE INDICATORS
RESPONSIBILITY ANNUAL TARGETS
18/19 19/20 20/21 21/22 22/23
Use of ICT platforms to Use of ICT platforms to facilitate
PRGHS-AD Begin Continue Continue Continue
inform, engage and information sharing and two-way
facilitate customer communication
queries Increased presence in old and new PRGHS-AD
Begin Continue Continue Continue
media platforms
Improve complaint Standardized complaint handling MDS,
DCSD, Begin Continue Continue Continue
handling process and protocol improved and implemented
PRGHS-AD
delivery throughout all DCs
Records maintained of NEA’s response DCSD, PRGHS-AD
Begin Continue Continue Continue
timing and activities
Complaint Handling Report generated DCSD, PRGHS-AD
Begin Continue Continue Continue
quarterly for submission to Senior
Management
Complaint Handling Annual Report DCSD, PRGHS-AD
Begin
compiled
ACTIVITIES KEY PERFORMANCE INDICATORS
RESPONSIBILITY ANNUAL TARGETS
18/19 19/20 20/21 21/22 22/23
8.3 THEME 3: IMPROVE CUSTOMER SERVICE
CORPORATE DEVELOPMENT PLAN 2018/19 - 2022/23
77
CENTRAL OFFICE
Ratnapart, Kathmandu
TEL.: + 977-1-4153051
FAX: + 977-1-4153009
EMAIL: info@nea.org.np
www.nea.org.np
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TheSquare, www.thesquare.com.np