The Nepal Electricity Authority’s (NEA) net profits exceeded Rs1 billion in the last two fiscal years, putting the perennially loss-making organisation on a firmer financial footing.

The state-owned power utility posted a net profit of Rs1.01 billion in the last fiscal year ended mid-July 2018, according a provisional income statement published by the NEA. During the previous fiscal year 2016-17, the NEA made a net profit of Rs1.50 billion.

The NEA’s turnaround has been attributed largely to its success in reducing electricity leakage in the distribution system.

The power utility reduced system loss, popularly known as leakage, by more than 5 percentage points in the last two fiscal years by launching a nationwide campaign to prevent electricity theft. System loss has been brought down from 25.78 percent two years ago to 20.45 percent currently. The NEA reduced loss by 2.88 and 2.45 percentage points in two consecutive fiscal years.

Despite posting profits for two consecutive years, the NEA is a long way from achieving financial stability as it still has combined loss of a whopping Rs27.15 billion. The NEA management claimed that the coming year would be more exciting in terms of loss reduction and profitability.

Three-fourths of the total leakage is technical loss due to poor transmission and distribution system while the rest is due to electricity theft. According to the NEA, cutting technical loss will take some time as the existing transmission system needs to be updated.

NEA Managing Director Kulman Ghising said leakage would be brought down to 17 percent by the end of this fiscal year, mostly by controlling power theft. The reduction will translate into savings of at least Rs2 billion, according to NEA spokesperson Prabal Adhikari.

The NEA also expects revenues to swell significantly as a number of hydropower projects its is building are slated to come online this fiscal year. The 60 MW Upper Trishuli 3A and 14 MW Kulekhani 3 will start generating electricity by this fiscal year.

After the 456 MW Upper Trishuli Hydropower Project comes online later this year, the NEA’s revenues will increase sharply. After the plant starts generating electricity, it will be able to cut energy imports from India and slash expenses.

According to the power purchase agreement signed between the NEA and Upper Tamakoshi, it will pay the project Rs6.96 per unit of electricity in the dry season which lasts from December to May, and Rs3.63 per unit during the wet season which lasts from June to November.

Currently, the NEA imports electricity from India via different cross-border transmission lines at an average cost of Rs7.45 per unit. “This will help us increase our revenue significantly, thereby increasing our profitability,” said Adhikari.