Key Takeaways
- • Nepal Electricity Authority's pre-tax profit collapsed 43.4% year-over-year to Rs 5.04 billion in fiscal 2025/26, down from Rs 8.91 billion in 2024/25, marking a two-year decline of 62.1% from Rs 13.31 billion in 2023/24.
- • Foreign exchange liabilities surged 272.86% to Rs 11.51 billion due to currency fluctuations, becoming the primary headwind on profitability alongside elevated interest and depreciation expenses.
- • Core operational performance strengthened with total revenue reaching Rs 166 billion (up from prior year), electricity sales climbing 18.20% to Rs 148.62 billion, and gross profit expanding 13.17% to Rs 31.23 billion, signaling underlying business resilience.
- • Total assets grew 8.9% to Rs 779.19 billion with Rs 206.26 billion deployed in capital projects, while the utility distributed 217.3 million units of free electricity to approximately 2.59 million low-income domestic customers.
- • Operating profit increased 7.28% to Rs 24.81 billion and online tariff collections reached Rs 40.99 billion, demonstrating operational execution despite headwinds from foreign currency exposure and fixed cost absorption.
Summary
The Nepal Electricity Authority reported a significant deterioration in profitability for fiscal year 2025/26, with pre-tax net profit declining Rs 3.87 billion to Rs 5.04 billion. This represents a 43.4% contraction from the prior fiscal year's Rs 8.91 billion and extends a concerning two-year downtrend; FY2023/24 recorded Rs 13.31 billion in pre-tax profit. The primary driver of this profitability squeeze was a dramatic 272.86% surge in foreign exchange liabilities, which accumulated to Rs 11.51 billion as currency fluctuations intensified NEA's debt servicing burden. This forex exposure was compounded by rising interest payments and elevated depreciation charges across the utility's asset base.
Despite the profit contraction, NEA's underlying operational metrics demonstrated solid growth momentum. Total revenue reached Rs 166 billion with electricity sales climbing 18.20% to Rs 148.62 billion, translating into a 13.17% increase in gross profit to Rs 31.23 billion. Operating profit grew 7.28% to Rs 24.81 billion, indicating that core business performance and pricing power remained intact. The divergence between strong operational results and compressed net profitability underscores the material impact of financial expenses and foreign currency headwinds on bottom-line performance.
On the balance sheet, NEA expanded total assets 8.9% to Rs 779.19 billion, with Rs 206.26 billion committed to ongoing capital projects—reflecting continued infrastructure investment despite the profit pressure. Collection efficiency improved with online tariff collections reaching Rs 40.99 billion. The utility maintained its social mandate, providing 217.3 million units of free electricity to approximately 2.59 million low-income domestic customers, while average customer consumption reached 2,088 units. These dynamics present a mixed picture: robust demand fundamentals and operational execution are being offset by unfavorable currency movements and rising financial costs, creating pressure on shareholder returns and reinvestment capacity.
Despite the profit contraction, NEA's underlying operational metrics demonstrated solid growth momentum. Total revenue reached Rs 166 billion with electricity sales climbing 18.20% to Rs 148.62 billion, translating into a 13.17% increase in gross profit to Rs 31.23 billion. Operating profit grew 7.28% to Rs 24.81 billion, indicating that core business performance and pricing power remained intact. The divergence between strong operational results and compressed net profitability underscores the material impact of financial expenses and foreign currency headwinds on bottom-line performance.
On the balance sheet, NEA expanded total assets 8.9% to Rs 779.19 billion, with Rs 206.26 billion committed to ongoing capital projects—reflecting continued infrastructure investment despite the profit pressure. Collection efficiency improved with online tariff collections reaching Rs 40.99 billion. The utility maintained its social mandate, providing 217.3 million units of free electricity to approximately 2.59 million low-income domestic customers, while average customer consumption reached 2,088 units. These dynamics present a mixed picture: robust demand fundamentals and operational execution are being offset by unfavorable currency movements and rising financial costs, creating pressure on shareholder returns and reinvestment capacity.
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