Kulman Ghising Slams Nepal’s New 5% VAT on Electricity Above 50 Units

Kulman Ghising has sharply criticized Nepal’s new decision to impose a 5 percent value added tax on electricity consumption above 50 units per month, calling it a policy that punishes users instead of encouraging energy demand. He has demanded that the government reverse the measure immediately, arguing that domestic electricity use should be promoted, not taxed further.

The tax was introduced in the budget for the upcoming fiscal year 2083/84, presented on Friday, and has already triggered a political and public backlash. Ghising, who is chairman of the Ujyaalo Nepal Party and a former energy minister, said the move places an unfair burden on the public at a time when the state should be pushing for wider electricity adoption.

Why the decision is drawing criticism

Ghising’s main argument is simple: Nepal has spent years building up its electricity generation capacity, so policy should focus on increasing domestic consumption rather than making power more expensive for ordinary users. He said the government should be creating incentives to use more electricity, not introducing taxes that could discourage households from consuming it.

That criticism reflects a broader policy tension in Nepal’s energy sector. The country has repeatedly faced questions about how to balance revenue collection, industrial demand, household affordability, and the need to absorb rising electricity output into the domestic market.

What the new tax means

Under the budget proposal, electricity consumption above 50 units per month would face a 5 percent VAT charge. For many households, that threshold is low enough to affect a significant share of monthly users, especially in urban areas where electricity is already a major part of living costs.

Ghising’s camp argues that the policy could send the wrong signal to consumers at exactly the wrong time. Instead of making electricity more attractive than imported fuels or other alternatives, the tax risks slowing the shift toward electric cooking, appliances, and other forms of domestic energy use.

A political fight over energy policy

The controversy also adds to the scrutiny surrounding Ghising himself, a highly visible figure in Nepal’s energy politics. He is widely known for his role in helping end the country’s long power cuts, which has made him both a celebrated reformer and a frequent target in political debates over energy management.

His latest criticism places the government on the defensive and frames the tax as a step backward for an economy that needs stronger electricity demand. By formally demanding withdrawal of the decision, Ghising has turned a budget line item into a larger argument about Nepal’s energy future.

What happens next

The government has not yet publicly backed down from the proposal, but the backlash suggests the VAT issue could become a significant flashpoint in the budget debate. If the measure remains in place, it may face continued criticism from political leaders, energy advocates, and consumers worried about rising utility costs.

For now, the dispute is about more than one tax. It is about whether Nepal wants to treat electricity as a growth engine or as another source of public revenue.