31/05/2026
🕉 PM B***N SHAH DEFENDS NEW ELECTRICITY VAT IN PARLIAMENT Q&A, CITING GRID CONSTRAINTS
KATHMANDU— Prime Minister B***ndra (B***n) Shah today vigorously defended the government’s newly introduced fiscal policies during a high-stakes question-and-answer session in the Federal Parliament. Addressing intense scrutiny from lawmakers, PM Shah justified the imposition of a concessional 5% Value Added Tax (VAT) on monthly electricity consumption exceeding 50 units, framing it as a critical strategy to prevent a systemic collapse of the national grid.
🕉 The tax measure, unveiled just two days prior by Finance Minister Dr. Swarnim Wagle in the historic Rs 2,124.34 billion budget for Fiscal Year 2083/84 (2026/27), has sparked fierce national debate.
🕉 "Our Grid Cannot Handle the Electric Era Yet"
Responding to questions regarding the financial burden on the middle class, Prime Minister Shah argued that Nepal's current localized energy infrastructure is drastically unprepared for an unmanaged transition to green energy.
> If every household in a neighborhood switches to electric induction cooking simultaneously tonight, our localized transformers and substations will face immediate systemic failure," PM Shah stated on the parliament floor. "We want an all-electric era, but the current infrastructure cannot support it."
> Prime Minister emphasized that the revenue generated from the 5% VAT would be strictly earmarked for the immediate expansion and upgrading of local power infrastructure. He reminded the house that the first 50 units remain completely exempt, shielding low-income households from any tax impact.
> The New Power Tariff Framework
Under the newly tabled Finance Bill, electricity—which previously fell outside the standard 13% VAT regime—will now see a multi-tier, concessional 5% levy.
The budget has simultaneously allocated Rs 70 billion specifically for transmission line construction alongside plans to unbundle the Nepal Electricity Authority (NEA) into three separate entities for generation, transmission, and trading.
🕉 Opposition Mounts "Anti-Consumer" Criticism
Despite the Prime Minister's structural justifications, the policy faces stiff resistance inside and outside parliament.
Leading the opposition pushback, Chairperson of the Ujyalo Nepal Party (UNP) and former NEA Managing Director Kulman Ghising slammed the decision over the weekend, labeling it "anti-consumer" and counterproductive to national interests.
"While the government publicly advocates for increasing domestic consumption of indigenous hydropower, it is simultaneously taking steps to discourage it," Ghising said in a statement. Critics argue that taxing power above 50 units will deter families from adopting electric vehicles (EVs) and induction stoves, ultimately driving consumers back to imported liquefied petroleum (LP) gas and worsening the country's trade deficit.
Parliamentary debates on the Finance Bill are expected to continue through the week as opposition lawmakers demand a rollback of both the electricity VAT and the newly adjusted EV customs duties.
***nshah
