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Newly Appointed CEO and NEA

Issue 38, September 18, 2011

Siddhi B. Ranjitkar

Former Minister for Energy has appointed a new CEO to the Nepal Electricity Authority (NEA) following the open competition believing to have the best management brain for running the NEA. However, not even a month has passed since the appointment of the highly paid CEO, the NEA has introduced an 18-hour per week power outage since September 15, 2011. NEA has been a white elephant for the government. It has so great assets even the managers don’t have the idea of the total assets. It also has a huge army of staffs several times more than required for running the power systems in Nepal.

Former Minister for Energy Gokarna Bista has appointed a new CEO to the Nepal Electricity Authority (NEA) at the cost of Rs 250,000 per month before he is about to leave the office, as Prime Minister Jhalanath Khanal has been under pressure to vacate the office. The new CEO is supposed to manage the NEA to mitigate the power outage and the loss it has incurred but the situation has been just the opposite.

The CEO has failed in mitigating the power outage. He sees no alternative but to increase the power outage to 18 hours a week even in the monsoon period even when water is abundantly available in the rivers to run the turbines at their maximum capacities. Previously, the power outage has been for such duration only during the dry season when water levels in rivers drop causing to shut down some turbines generating less power.

The irony is that with the highly paid CEO on the management seat, Nepalis have faced the power outage for 18 hours a week even during the rainy season. For this reason alone, the government either needs to fire him or he needs to quit the job on the moral ground but it has not happened so far. The CEO has been harvesting Rs 250,000 salary per month apparently for doing nothing to mitigate the power outage.

The NEA has been green pasture for the unscrupulous politicians to graze on. Former Ministers such as KP Oli and Sher Bahadur Deuba have been using the vehicles belonging to the NEA. They have received even fuel from the NEA for running their vehicles for their private purposes. We don’t know how many other former ministers have been using such vehicles at the cost of the NEA.

Former Minister for Energy Dr. Prakash Sharan Mahat has illuminated his home and the neighborhood for 24 hours a day even when other ministers have to rely on inverters to keep the lights on in their official residence. Dr. Mahat also has done a remarkable job of stopping the import of inverters stating these inverters use more power causing additional pressure on the power supply. However, the truth might be different. The prices of medium size inverters have jumped from Rs 30,000 to Rs 90,000. We don’t know how much money Dr. Mahat has made from the decision made on not permitting the import of inverters. Local media has reported that Dr. Mahat has benefited from some other agencies engaged in alternative energy.

The CEO could do a lot of improvement in the management of power transmission lines. Most of the low-voltage power transmission lines feeding the power to towns have been very old. The poles carrying the power lines are very old and slanting to the ground giving the impression that they might fall at any time. The dilapidated power transmission lines cause short circuits and power loss.

If the CEO has been smart enough he would start off improving the dilapidated power lines immediately. NEA has sufficient surplus manpower and resources, too to improve the power transmission lines without additional financial burden on it. However, the CEO has not been able to do so for the reasons unknown to us.

The management has not been able to reduce the power loss that has reached 45 of the power production. The power loss has been not only due to some people have stolen the power but also from not improving the very old power transmission lines.

The NEA management has not been able to effectively use the huge manpower it possesses. It has not been able to use the assets it has. Some staffs hardly work two hours a day but they receive not only the full salaries but also other benefits, too. The NEA management can hire but it cannot fire anybody due to the strong labor unions affiliated to different political parties.

Nobody knows the physical assets the NEA possesses. Nobody knows how many motor vehicles the NEA has, and who have been using them. Many old motor vehicles are lying unused on the premises of the NEA offices across Nepal. Billions of rupees worth of assets have remained unused elsewhere. Most of them are rotting under the sun and the rains. Transformers and other equipment have been lying idle, too.

If billions of rupees worth of equipment and vehicles are not needed to the NEA, then, the CEO could sell them in the public auctions but that has not happened it. Clearing off the unwanted vehicles and equipment, the NEA would be in a better position to evaluate its assets and show the true records of its assets in the books. In view of the current situation of the NEA, the CEO could immediately start auctioning the unused vehicles and equipment. All old vehicles not usable could go immediately; similarly, all the rotten transformers and other equipment also could go. Then, the backyards of the NEA offices will be clean and the record books of all these materials and equipment and vehicles.

Procurement of equipment and vehicles has been controversial. The NEA management has purchased vehicles and equipment at high prices more often than not. Procurement of small items such as computers and other office equipment and stationery have been done more haphazardly than any other items. Probably, this practice has continued even today.

The CEO could stop the haphazard procurement of materials, equipment and vehicles. He should be able to design a system of procurement so that nobody could cheat at the procurement of anything for the NEA. Such action could save the millions if not billions of rupees for the NEA.

Currently, the NEA has the manpower several times more than required. One simple estimate states the NEA has ten times more manpower than it actually needs. Low output of such manpower has been the reason for the NEA not running properly. We can see the army of staffs waiting for a work order. The management sends several staffs when a few of them could do the job.

The centralized management system of the NEA has been one of the main reasons for the NEA has been so inefficient. So, the NEA should decentralize the management of the NEA. Decentralization should make the local managers responsible for procuring the equipment, vehicles and materials and for their efficient uses. They also should be responsible for anybody using the vehicles, equipment and materials for any other purposes other than for the NEA. Certainly, they should be responsible for smooth supply of power to consumers, and for paying an immediate attention to the consumers’ calls for repair and maintenance. Currently, the staffs of the NEA behave more like bureaucrats than service providers.

Similarly, the local managers need to be responsible for the power loss. They should be awarded for plugging the holes that cause the loss of power. Such holes might be either the very old power transmission lines or some people might have stolen the power hooking their wires to the main power transmission line.

Concerning the mitigation of the current power shortage, the CEO could renovate the existing unused thermal power plants and bring them to operation at the time when additional power is needed to meet the demand. The CEO might even consider building a new 200 MW thermal plant to supplement the power even though the cost of production of power would be high to reduce the power outage and let the people run their industries and businesses regularly without breaks due to the power outage.

The CEO needs to be able to work without the influence of the concerned minister. The performances of the CEO needs to be judged by the efficiency of the management of the NEA, availability of power at the lost lowest possible price, efficient use of manpower, equipment, materials and vehicles. Then, only the CO could justify the salary of Rs 250,000 per month he has been receiving.

September 16, 2011

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