The disaster, which struck on August 26, caused extensive damage to vital energy assets under the Nepal Electricity Authority (NEA). According to Manohar Das Mul, president of the Non-Life Insurance Entrepreneurs Association of Nepal and chairman of Sagarmatha Lumbini Insurance (SALICO), private sector hydropower projects remain adequately covered due to mandatory bank loan stipulations. However, legacy state-owned assets have operated under a decades-old policy of self-insurance.
Uninsured State Assets and Infrastructure
Field data and industry assessments indicate that several major NEA-owned power stations, substations, and high-voltage transmission lines possess no insurance protection:
Upper Trishuli-3 'A' (60 MW): Headworks, tunnels, and structural components sustained heavy damage from floodwaters.
Trishuli (24 MW) and Devighat (14 MW) Hydropower Projects: Both historic facilities suffered severe impacts to their dams and powerhouses.
Trishuli-3 'B' Hub Substation (220 kV): This strategically vital substation was completely wiped out by the floods.
Transmission Line Networks: Critical lines—including Samudratar-Trishuli (132 kV), Chilime-Trishuli (66 kV), Chilime Hub-Trishuli-3 'B' Hub-Matatirtha (220 kV), and Trishuli-Balaju (66 kV)—suffered extensive destruction to towers and wiring.
Flaws in Subsidiary Coverage and Legacy Policies
While projects managed through NEA subsidiary companies hold some form of insurance, outdated valuation policies have created severe financial gaps:
Chilime Hydropower Project (22 MW): Insured with Himalayan Everest Insurance based on annual depreciated asset values, payouts will fall short of the actual capital required for modern reconstruction.
Rasuwagadhi Hydropower Project (111 MW): Insured using project cost estimations set a decade ago, leaving current reconstruction expenses drastically underfunded against inflation and surging material costs.
Upper Trishuli-3 'B' (37 MW): As an active construction site, its damages are covered under the primary contractor's insurance.
For decades, the NEA relied on a "self-spending in case of disaster" framework, bypassing annual premiums under the assumption that insurance costs were too high and claim settlements too restrictive. However, climate-induced extreme weather events have rendered this historical assumption fiscally unsustainable.
Claim Challenges and Relief Efforts
Post-disaster assessments face severe physical barriers. With roads and access tunnels completely shattered and missing persons reported, physical site inspections by surveyors remain heavily restricted. Furthermore, traditional paperwork and police report requirements are hindering immediate relief.
To expedite relief, the non-life insurance sector has contributed between Rs 3.5 crore and Rs 4.5 crore to the Prime Minister's Natural Disaster Relief Fund. Simultaneously, the Insurance Association of Nepal (NBA) is collaborating with the Ministry of Finance and the Nepal Insurance Authority to establish a fast-track procedure, including a proposed policy for immediate 50 percent interim payouts.
As policymakers confront the mounting crisis, the disaster serves as a stark reminder of the financial perils tied to leaving strategic state assets uninsured.
