Uninsured Hydro Projects Damaged by Floods Cost Nepal Electricity Authority Rs 25 Billion

The Nepal Electricity Authority (NEA) has incurred an estimated loss of Rs 25 billion following devastating floods in the Bhote Koshi River on Bhadra 10, which severely damaged three of its hydropower projects. Despite managing assets worth trillions, the state-owned utility had failed to insure these fully owned facilities, leaving the government to absorb the massive financial blow entirely.

The disaster severely impacted three major facilities: the 60 MW Trishuli Three 'A', the 24 MW Trishuli, and the 15 MW Devighat hydropower plants. Initial loss assessments estimate damages at approximately Rs 14.5 billion for Trishuli Three 'A', Rs 6 billion for Trishuli, and Rs 3.75 billion for Devighat.

NEA leadership defended the lack of insurance by citing cost-saving measures on annual premiums. Former Managing Director Kulman Ghising and acting Managing Director Dirghayu Kumar Shrestha argued that paying regular premiums for all assets over decades would exceed the cost of occasional, long-interval damages. Consequently, none of the NEA's 22 wholly-owned hydropower projects currently carry insurance coverage.

Insurance sector experts, however, have strongly criticized this approach, calling the failure to transfer risk a critical administrative oversight. Representatives from the Non-Life Insurers' Association pointed out that natural disasters do not provide advance warnings, and relying on past safety records to bypass insurance on vital national infrastructure creates unnecessary systemic vulnerability. Analysts warn that absorbing a Rs 25 billion deficit directly could ultimately force the utility to offset losses through future electricity tariff increases for consumers.