Electricity commission remains without office bearers as energy sector suffers


Apr 24, 2019

The government is yet to appoint office bearers to the Nepal Electricity Regulatory Commission more than a year after Parliament passed legislation paving the way for its establishment to replace the Electricity Tariff Fixation Commission even as problems plaguing the energy sector require immediate attention.

The problem, according to experts, is not lack of competent officials to get the commission up and running but political twists and turns. Meanwhile, stakeholders are facing issues pertaining to tariff revision and fixation, power purchase agreements, and market guiding provisions which they say must be resolved soon to avoid loss of investment and markets.

“The work previously done by the Electricity Tariff Fixation Commission, such as fixing the terms of power purchase agreements and tariff rates, is at a standstill, and the energy sector has not been able to move forward as a result,” said Shailendra Guragain, president of the Independent Power Producers’ Association.

Last December, a selection panel led by Energy Secretary Sanjay Sharma had proposed the name of former energy secretary Anup Kumar Upadhyay for the post of the chief of the commission and recommended other candidates for appointment as members. But the Cabinet rejected the proposal.

Government officials should keep political egos aside and set up the commission allowing it to govern the sector and search for new markets for electricity, or else the sector will face losses running into billions as Nepal is heading to become an energy surplus country, said sources requesting not to be named.

Officials of the Nepal Electricity Authority are scrambling to resolve tariff conflicts which they say cannot be done unless the commission assumes full shape. A row between industrialists and the Nepal Electricity Authority over the energy billing and pricing mechanism has been intensifying. But utility officials say they can do nothing to resolve the issue in the absence of a fully functioning electricity commission. According to industrialists, the electricity authority is collecting huge amounts in energy charges by implementing premium charges to allow industries to use dedicated feeders and trunk lines despite the end of load-shedding across the country. The state-owned power utility says it is forced to charge industrial tariffs set in 2015 as the country does not have an authority that can revise them.

Industries were provided regular electricity through dedicated feeders and trunk lines at premium prices when there was load-shedding in the country, and they are still being billed at the same rate till date.

“The electricity authority is not authorised to make changes to the tariffs, we can only make suggestions. It is up to the commission to set and implement new rates,” said Kulman Ghising, managing director of the utility. When asked about the row with industrialists, Ghising said that the commission must be formed to decide the tariff and other issues related to contradictory provisions in the regulations that have led to the conflict.

In the absence of the commission, the electricity authority has been fixing the power purchase agreement rates with independent power producers. The producers say that it is against the norms of a fair market as the electricity authority itself is a power producer.

“The commission must be formed soon to make the market fairer for independent producers, and the electricity authority also should not be without a guiding agency,” Guragain said.

Energy sector experts say that private producers must also be kept in check as they have pooled investments from the public. “Everyone is focusing on the scale of projects and finances, and the capacity of power generation, but without an authority to regulate the sector, the energy produced in the country cannot be marketed as per present expectations, and that will lead to losses in the billions,” an expert said.

Nepal is among the few countries in the world that do not have a regulating agency in the electricity sector.


Source: The Kathmandu Post