As per the power utility’s data, the country witnessed energy leakage of 11.28 percent in the fiscal year 2018-19 which resulted in financial losses amounting to millions of rupees.

In line with its target, the state-owned utility has issued circulars to eight distribution centres and its division offices to keep tabs on electricity pilferage, upgrade the capacity of transformers and balance the power load.

In the past three years, the power utility has been able to reduce transmission and distribution losses to 15.32 percent from 25.78 percent in fiscal 2015-16. According to the Nepal Electricity Authority, a 10 percent reduction in energy loss resulted in an increase in revenue of Rs7 billion during the review period.

“High system loss is a major challenge, and distribution losses have contributed adversely to the financial health of the power utility,” said the Distribution and Consumer Service Directorate of the Nepal Electricity Authority. “We aim to cut losses by strengthening the network, upgrading the capacity of the transformers, bringing new substations into operation to balance the load and keep tabs on electricity pilferage.”

In the last fiscal year, the power utility lost 1,156.85 gigawatt hours out of the total available 7,551.23 gigawatt hours because of poor quality transformers, conductors and pilferage.

The country lost 27 percent more energy than the annual output of the Kali Gandaki A, the largest hydel scheme in operation which churns out 842 gigawatt hours annually.

In a bid to curb losses, centres with high distribution losses—Janakpur, Attariya, Nepalgunj, Biratnagar and Butwal—have been given high reduction targets and the distribution centres with low losses—Hetauda, Kathmandu and Pokhara—have received low targets.

The Province 1 office at Biratnagar with 24 distribution centre has been asked to bring down system losses to 8.8 percent from the existing 12.15 percent. The Province 2 office with 23 distribution centres has been directed to cut back losses from 23.36 percent to 10.97 percent. The Butwal wing of the power utility with 11 distribution centres is expected to reduce losses to 9.26 percent from 12.36 percent. And the Attariya office with 12 distribution centre is expected to bring losses down to 10.69 percent from 14.39 percent.

According to Nepal Electricity Authority Managing Director Kulman Ghising, the focus has now shifted to improving the reliability of energy supply, adopting stern governance measures at consumer touchpoints, and enhancing financial discipline at distribution centres.

“We plan to achieve the reduction targets by optimum utilisation of sealed conductor cables in loss-prone areas, upgrading overloaded transformers and coordinating with the local administration to investigate cases of meter tampering and electricity pilferage,” said Ghising.

The country added more than 600 kilometres of power lines to the country’s domestic and cross-border electricity transmission network, and built 30 new distribution substations in the last fiscal year.

The power utility plans to spend more than 50 percent of its budget for the current fiscal year on increasing the capacity of transmission lines and power distribution infrastructure.

Upgrading the existing substations and building new transmission lines and distribution grids in strategic industrial zones are expected to improve the reliability of electricity transmission throughout the grid.

The declaration to reduce distribution losses comes at a time when many factories in the industrial corridors in the southern plains are complaining about intermittent supply and poor voltage adversely affecting their productivity. Instances of general households in major cities facing power outages have also increased because of frequent breakdowns in the near-obsolete transformers and cables.

"Nepal's power supply is expected to increase rapidly during the next several years because of commissioning of the 456 MW Upper Tamakoshi hydropower project and an additional 1,635 MW from multiple hydropower projects with planned commissioning by 2022," states a report by the Asian Development Bank, the financier of the Power Transmission and Distribution Efficiency Enhancement Project.

"Therefore, existing transmission and distribution systems need to be immediately rehabilitated and upgraded for the network to be able to deliver the additional electricity supplies to consumers."

The multilateral agency has provided $150 million as a 32-year term concessional loan at 1 percent interest during the eight-year grace period and 1.5 percent interest after the grace period under the distribution enhancement project.

Also, the reduction of distribution losses is considered by energy officials to be a fundamental effort consistent with achieving Sustainable Development Goal 7 (Sustainable Energy for All) as well as Nepal’s Nationally Determined Contributions for the United Nations Framework Convention on Climate Change.

How much electricity is lost

Fiscal Year Distribution Loss (percent of available energy)

2014-15 19.87

2015-16 19.80

2016-17 16.83

2017-18 14.82

2018-19 11.28