Nepal's power utility lifted sales by 18%, but currency losses cut its profit by 59%

On almost every operating measure, the Nepal Electricity Authority (NEA) had a strong year. It sold more power at home, earned more from India and lost slightly less electricity in its wires. Yet its bottom line shrank by more than half. The state utility's pre-tax profit for the 2025/26 fiscal year, which ended in mid-July, was Rs 5.04bn (about $33m), 58.6% lower than the Rs 12.17bn of the year before, according to figures presented at its 41st anniversary and reported by Ratopati. Kantipur, reporting the same event, attributed the fall chiefly to the rise of the dollar.

The numbers were read out on 17 August by the NEA's acting executive director, Dirghayu Kumar Shrestha, Kantipur reported. They have since become a political talking point. Kulman Ghising, the former NEA chief who now leads the Ujyalo Nepal Party, wrote that the shrinking profit "requires a serious review and improvement", according to Online Khabar, and argued that the answer was to strengthen the authority rather than weaken it.

Strong operations, weak finances

Revenue from electricity sales rose 18.2% to Rs 148.62bn, and total income including other sources reached about Rs 166bn, Kantipur reported. Gross profit grew 13.16% to Rs 31.23bn. Operating profit also rose, by a little over 7%, though Kantipur and Ratopati give slightly different totals for it.

Exports helped. The NEA earned Rs 29.31bn from selling power to India, 67.9% more than a year earlier, Ratopati reported, while imports fell by about 30%. Republica, citing its own trade tally, put export earnings at Rs 29.32bn and the net gain from cross-border trade at Rs 18.76bn, more than four times the Rs 4.53bn of 2024/25. The record export season and its limits are covered in our report on power exports and the Rasuwa flood.

Technical and commercial losses on the network edged down to 12.16% from 12.26%. The customer base grew 3.85% to about 5.93m, of whom about 2.59m domestic consumers received free electricity, Ratopati reported.

The cost of the dollar

The damage came below the operating line. The liability the NEA bore because of movements in foreign exchange rates jumped 272.86% to about Rs 11.5bn, from Rs 3.09bn a year earlier, according to Kantipur and Ratopati. Financial expenses rose 20% to Rs 7.60bn, from Rs 6.33bn, Ratopati reported. Depreciation, impairment losses and provisions added further charges, Kantipur reported.

The exchange loss followed the rise of the dollar against the Nepali rupee, Kantipur reported. The rupee is pegged to the Indian rupee, so it weakens against the dollar whenever the Indian currency does; the mechanics are explained in our explainer on why a dollar costs about Rs 155. When that happens, the rupee value of any obligation denominated in foreign currency rises, whether or not a payment falls due that year.

The result is a utility whose profits now depend as much on the currency market as on how well it runs the grid. Profit has fallen for two years running: Ratopati, citing net profit after tax, reported Rs 13.31bn in 2023/24 and Rs 8.91bn in 2024/25 before the latest drop.

A grid owned increasingly by others

The NEA is also becoming more of a buyer and seller than a producer. Of the 18,624 gigawatt hours available to the system in 2025/26, its own plants produced 2,803 GWh and its subsidiary companies 3,826 GWh, while the private sector supplied 10,825 GWh, Ratopati reported. Installed capacity reached 4,120 megawatts after 529 MW was added during the year.

At the anniversary event, Mohan Dangi, president of the Independent Power Producers' Association, Nepal, called for transmission lines to be opened to private companies, Kantipur reported, and the energy secretary, Sarita Duwadi, stressed the need to expand the network.

What to watch: the NEA's quarterly results for the current fiscal year, which will show whether exchange losses keep eating into operating gains; any tariff decision by the Electricity Regulatory Commission; and whether the government acts on calls to let private developers build and own transmission lines.