Kathmandu. The possibility of an immediate end to the conflict between Israel-America and Iran appears slim. This war, which began on February 28, is expected to impact many countries globally, including Nepal, affecting everything from the energy market to daily life.
The global oil market is currently experiencing significant volatility. The crisis in petroleum products is set to impact the energy sector. As Israel-America and Iran engage in retaliatory strikes, the global supply chain is being disrupted. In this scenario, Nepal is likely to see a sharp increase in electricity demand.
Nepal Electricity Authority (NEA) faces the challenge of addressing the soaring electricity demand and the severe shortage of transformers, which are the backbone of the distribution system. During the dry season, reduced domestic production forces the authority to import electricity from India. Furthermore, the weak infrastructure of the authority’s distribution system and the impact of rising raw material prices in the international market mean it cannot fully avert the risk of an energy crisis.
The NEA has stated that it is studying management strategies. The authority mentioned that it has begun preparations to manage the potential energy crisis and rising electricity demand. NEA Managing Director Hitendra Dev Shakya stated that the authority is making necessary preparations to manage the expected increase in electricity consumption due to shortages or price hikes in petroleum products.
He indicated that the West Asia crisis could lead to supply issues for diesel and petrol, potentially increasing electricity demand in areas like electric vehicle (EV) charging. According to Managing Director Shakya, the pattern of electricity consumption will not change overnight just because of fuel shortages.
Furthermore, Ganesh Karki, President of the Independent Power Producers’ Association, Nepal (IPPAN), pointed out the risk that Nepal might not receive electricity if India faces an energy crisis due to fuel shortages stemming from the West Asia tensions. He noted that Nepal is compelled to import electricity from India during the winter, and the West Asia tension could exacerbate the problem.
“We are currently importing electricity from India. But if India stops supplying or faces its own shortage, where will we get it from? This is the reality today; our production only suffices for the monsoon season,” Karki said.
He stated that conflicts or other crises abroad could disrupt the supply chain for petroleum products and gas, affecting even a large country like India. If India faces an energy crisis, its electricity exports to Nepal could halt, meaning Nepal should learn from this situation and use it as an opportunity to increase its own electricity generation.
“Such problems occur periodically, sometimes every two years and sometimes every four years. Therefore, this is the biggest opportunity for our country. We must at least gain the knowledge that we need to be self-reliant in energy,” he said.
To eliminate the compulsion to import from India and avert future energy crises, he suggested that Nepal must increase domestic production and also boost internal consumption.
West Asia Tensions and Electricity Demand Projection
The Iran-Israel crisis in West Asia has increased fears that the global market for petroleum products will be affected and prices will soar. The NEA also anticipates a direct impact on Nepal’s energy consumption patterns.
It is certain that consumers will be attracted to alternative energy sources due to shortages or steep price hikes in petroleum products, especially leading to increased pressure on electric vehicle (EV) usage and charging stations. Additionally, the use of electric appliances like induction stoves for domestic purposes is also expected to rise.
Managing Director Hitendra Dev Shakya stated that while consumption patterns won’t change overnight due to fuel shortages, there is a strong possibility of a 10 to 15 percent overall increase in electricity demand. The NEA is preparing and managing to meet this demand.
“People won’t immediately abandon diesel vehicles for electric ones just because there is no petrol. The structure of electricity consumption won’t change overnight,” Managing Director Shakya said. “However, overall electricity demand could increase by 10 to 15 percent. We are preparing and managing to handle that.”
In view of the potential rise in electricity demand, the NEA has issued strict directives to its subordinate bodies to continuously monitor its transmission lines, distribution lines, and transformers. However, this preparation by the authority is severely challenged by the shortage of transformers, a key component of the distribution system.
Transformer Shortage, Preparation to Purchase Domestic Production
While an increase in electricity demand is projected due to the petroleum crisis, the problem of transformers failing and burning out due to increased load has already begun with the onset of the summer months. The NEA has stated that it is working on replacing damaged transformers.
The NEA had called for tenders to purchase 1,200 transformers six months ago. A Chinese company, which quoted the lowest bid, was selected technically and financially and awarded the contract. An NEA employee revealed that the management, which felt secure after the Chinese company secured the contract, was informed about 20 days ago that the company could not supply the transformers.
It is understood that the contracted company cited problems in the global supply chain due to the Iran-Israel-America tensions as the reason it cannot bring transformers from abroad.
The impact of international market price hikes has also affected domestic companies. However, Managing Director Shakya stated that the NEA is attempting to procure supplies by awarding contracts to Nepali companies. According to him, the NEA is trying to solve the problem by purchasing transformers despite various difficulties.
Three Strategies by NEA to Avert Transformer Shortage
With the immediate path for new transformers blocked and existing stock depleted, the NEA has adopted technical and managerial measures to overcome the crisis by maximizing the use of available resources. According to Managing Director Shakya, three main strategies have been formulated to manage the shortage.
Shakya informed that technical control measures are being implemented using technologies like smart meters to prevent transformers from being overloaded and burning out. He added that efforts to repair already damaged transformers are being intensified instead of scrapping them. Considering potential future crises, the NEA has stated that the procurement process from Nepal’s own transformer manufacturing companies is being expedited to build up reserves.
India Assures Electricity Imports Will Not Stop Immediately
The NEA has stated that there are no issues with production and supply for the authority amidst projections of an energy crisis. According to the NEA, the current peak hour electricity demand in Nepal is around 2,100 megawatts. However, due to reduced water flow in rivers during the dry season, only about 1,500 megawatts are being generated from Nepal’s hydropower projects.
The NEA is completely dependent on India to meet this shortfall of 600 megawatts. If India stops supplying electricity, the NEA cannot manage the load with domestic production alone. In such a situation, the authority would be forced to shut down industries during peak hours (implement load shedding) to supply power to domestic customers.
The NEA has been purchasing electricity daily through competitive bidding on the Indian Energy Exchange (IEX) Real Time and Day Ahead markets at a rate of about four rupees per unit. The permission to purchase electricity this way is set to expire on April 1, 2026
Although the NEA sent a letter in January to renew the permission for electricity import from April to October, India did not respond for a long time. However, the NEA stated that during the Nepal-India Power Exchange Committee (PEC) meeting held in Pokhara last Thursday and Friday, they received a verbal assurance to extend the electricity import permission.
Managing Director Shakya told Ratopati that the team led by Vikrant Kumar Singh from India’s Central Electricity Authority (CEA) gave verbal assurance to renew the power purchase permission at the meeting. “We are sending a reminder letter again on Tuesday, based on the verbal assurance we received that renewal will happen after April 1, 2026. Managing Director Shakya said. “We have received assurance that the permission to import electricity will be renewed by April 1, 2026.
According to Shakya, India’s CEA, under the Ministry of Power, had granted permission on December 31, 2025 to import a total of 654 megawatts of electricity 24 hours a day—600 megawatts via the Dhalkebar-Muzaffarpur 400 kV transmission line and 54 megawatts from Tanakpur-Mahendranagar. The NEA is confident that the same volume of imports will continue.
According to Shakya, about 10,000 megawatt-hours of electricity are currently being imported daily from India, which is less than in December-January. However, he estimates that imports may increase as demand rises with the onset of hotter weather in April-May.
Ratopati