NEA profit falls sharply despite growth in electricity sales

Nepal Electricity Authority (NEA) recorded a sharp decline in profit in fiscal year 2025/26, even as electricity sales, operating profit and exports increased.

NEA’s pre-tax profit fell to NRs 5.04 billion, down 58.6% from NRs 12.17 billion a year earlier. Another comparison shows the authority’s reported net profit falling by about NRs 3.97 billion from the previous year, underscoring the growing pressure on its bottom line.

The decline came despite stronger core operations. NEA generated about NRs 166 billion in revenue from electricity sales and other sources during the year. Electricity-sales revenue rose 18.2% year-on-year to NRs 148.62 billion.

Overall gross profit increased 13.16% to NRs 31.23 billion, while operating profit also rose by roughly 7%. Electricity leakage improved marginally to 12.16%, from 12.26% the previous year, while increased electricity exports also supported operating performance.

However, rising financial and non-cash costs eroded these gains. Foreign-exchange loss surged by 272% to NRs 11.5 billion, from the previous year’s 3.1 billion rupees, reflecting the impact of a stronger US dollar and other currency movements on NEA’s foreign-currency obligations. 

Higher interest and depreciation expenses, along with provisions for impairment losses, further reduced profitability.

The figures highlight a growing disconnect between NEA’s operational performance and its final earnings: the authority is selling more electricity and generating higher operating profits, but financing, foreign-exchange and infrastructure-related costs are consuming a larger share of those gains.

On the other hand, NEA’s total assets rose 8.9% to NRs 771.19 billion during the fiscal year, reflecting continued investment in generation, transmission and distribution infrastructure. Projects under construction accounted for more than NRs 206 billion in investment.

Meanwhile, NEA’s electricity exports reached a record high of NRs. 29.3 billion in 2025/26, a growth by 68%.

At its 41st anniversary, NEA officials and energy-sector stakeholders emphasised the need to increase domestic electricity consumption. The government is preparing fixed electricity tariffs for productive industries and seasonal tariffs aimed at increasing the use of surplus power during the wet season, when hydropower generation is highest.

Officials also called for faster expansion of transmission and distribution networks, stronger cross-border transmission capacity and greater electricity trade with India and Bangladesh. Private-sector representatives urged the government to simplify transmission and power-trading arrangements and resolve longstanding disputes over dedicated and trunk-line electricity dues.

The latest results leave NEA facing a key challenge: how to finance rapid expansion of the country’s electricity system while managing foreign-exchange exposure, debt-servicing costs and rising depreciation. With production continuing to grow, improving domestic consumption and expanding exports will be crucial to turn its growing hydropower capacity into sustained economic returns.