Kathmandu: Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha has said that as building an energy-based economy has been accorded national priority, the regulatory body for the electricity sector must work to earn the trust of investors, consumers and other stakeholders.
Speaking while receiving the annual report of the Electricity Regulatory Commission (ERC) for fiscal year 2025/26, Minister Shrestha said regulatory decisions and policymaking should take into account market needs as well as the concerns of stakeholders.
ERC Chairman Dr. Ram Prasad Dhital handed over the annual report to Minister Shrestha on Thursday. Receiving the report, Minister Shrestha said recent disasters had created a need to rethink the diversification of Nepal’s energy system. He stressed the need to diversify the energy mix and further strengthen energy security.
Minister Shrestha said that with the energy sector requiring substantial investment, only a clear, predictable and credible regulatory environment can attract investment. He said the commission should ensure adequate coordination with all stakeholders, including investors, while formulating regulatory provisions.
The commission’s annual report states that various regulatory instruments were formulated and implemented in consideration of the changing needs of the electricity sector, market development, the investment environment and consumer interests.
During fiscal year 2025/26, the commission issued the Dispute Resolution Regulations, 2025; the Open Access Directive for Electricity Transmission and Distribution Systems, 2025; the Directive on Electricity Purchase and Sale Rates for Reservoir-Based Power Plants, 2025; and the Directive on Determining Consumer Electricity Tariffs, 2026.
The commission said the open-access provisions clarify eligibility, application and approval procedures, priorities and fees for using electricity transmission and distribution systems. They have provided a more organized basis for generators, electricity traders and large consumers to conduct electricity transactions through the existing system.
Similarly, a separate regulatory framework has been introduced to organize the purchase and sale of electricity generated by reservoir-based projects. The commission has also initiated the review and amendment of the Consumer Electricity Tariff Determination Directive, 2019; the Regulations on Conditions to Be Complied with by Electricity Licensees, 2019; and the Directive on Prior Approval for the Public Issuance of Shares by Electricity Companies, 2021.
The report states that the commission has also initiated studies on electricity costs and tariff structures, consumer tariffs, hydropower operating costs and generation costs to ensure that regulatory decisions are based on research and evidence.
The commission said it has also issued decisions on two long-disputed cases concerning electricity tariffs for dedicated feeders and trunk lines.
The commission said it will focus its work in fiscal year 2026/27 on three strategic priorities: institutional strengthening; expansion and strengthening of the regulatory framework; and regulatory facilitation for the restructuring of the electricity sector.
The commission said it will provide necessary facilitation within its jurisdiction to ensure that the structural development and restructuring of the electricity generation, transmission, trading and distribution sectors are managed in an organized and transparent manner through clear regulatory principles, standards and institutional mechanisms.
The commission plans to advance its regulatory work by prioritizing increased domestic electricity consumption, energy security, electricity market development, investment protection and safeguarding consumer rights and interests.
Likewise, damage to electricity infrastructure caused by the recent floods will also be incorporated into its upcoming regulatory work. The commission concluded that the impact on transmission and generation infrastructure has highlighted the need to strengthen the disaster resilience and overall resilience of Nepal’s electricity system.
Jalasarokar
