Himal Hub / A fresh debate has emerged in Nepal’s energy sector after the government, through the fiscal year 2083/84 (2026/27) budget, introduced a 5 percent Value Added Tax (VAT) on households consuming more than 50 units of electricity per month.
The decision has drawn strong criticism from Kulman Ghising, chairman of Ujyalo Nepal Party and one of Nepal’s most prominent figures in the power sector. Expressing his views on social media, Ghising argued that the new tax contradicts Nepal’s long-term objective of maximizing the use of clean, domestically generated electricity.
According to Ghising, imposing additional taxes on electricity consumption at a time when the country should be encouraging greater use of electric energy sends the wrong message to consumers. He said the policy runs counter to national efforts aimed at expanding electrification, reducing dependence on imported fossil fuels, and promoting cleaner sources of energy.
He further noted that many countries, including India, are adopting incentive-based policies to increase electricity consumption and accelerate energy transition. Nepal, he argued, appears to be moving in the opposite direction by placing an additional financial burden on consumers who use more electricity.
Ghising also rejected concerns that rising electricity demand could overwhelm the country’s power infrastructure. He maintained that Nepal has already made significant progress in expanding its transmission and distribution networks and that claims suggesting widespread use of induction stoves and other electric appliances could destabilize the system are not technically justified.
While acknowledging the need for continued investment in power infrastructure, Ghising questioned the government’s decision to generate resources through taxation on electricity users. He stressed that any revenue collected through the VAT would flow into the state treasury, making it essential for authorities to clearly explain how the funds would be utilized and ensure transparency in their allocation.
Describing the policy as lacking long-term vision, Ghising urged the government to reconsider the measure and adopt policies that encourage, rather than discourage, electricity consumption.
The government, however, has defended the decision, stating that the VAT is intended to mobilize additional resources for expanding electricity infrastructure and strengthening the country’s power system as demand continues to grow.
