Energy Ministry delays formation of regulatory body


Jan 14, 2018-The Ministry of Energy is dragging its feet in setting up a powerful commission to regulate the country’s energy sector despite introduction of the law to incorporate such a body.

The plan to form the Nepal Electricity Regulatory Commission (NERC) was floated a decade ago to set standards for and regulate organisations involved in generation, transmission, distribution and trading of electricity.

But after numerous delays, Parliament, in August, finally endorsed the Electricity Regulatory Commission Bill, paving the way for establishment of the NERC. The Bill was signed into law by President Bidya Devi Bhandari after 91 days.

The ministry could have used the 91-day window to draft the Electricity Regulatory Commission Regulation, which is required to bring the commission into operation. But it waited till the time the bill was signed into law to initiate the process of drafting the regulation. Had the ministry used the 91-day time, the regulation would have been endorsed by now, which would have enabled it to initiate the process of establishing the NERC’s secretariat and hiring staff required for the body.

“We have recently finalised the draft of the regulation and forwarded it to the Ministry of Finance for consultation,” Energy Ministry Spokesperson Dinesh Kumar Ghimire said. “The draft of the regulation was forwarded to the Finance Ministry around three weeks ago.”

Once the Finance Ministry sends back the draft, the ministry will forward it to the Cabinet for final approval. “We will be able to hire staff for the commission only after the regulation is endorsed by the Council of Ministers,” Ghimire said. Some of the staff of the Energy Ministry, however, said senior officials are not in a mood to bring the commission into operation before the formation of the new government.

“If the outgoing government appoints the chairperson and members of the commission, there is a chance of the new government removing them from their posts,” said a source. “This will set a bad precedent. We are, therefore, deferring the process.”

The private sector, on the other hand, has complained about the delay in establishment of the regulatory commission.

“The government brought the Act after we lobbied for quite a long time and it is now delaying the process of establishing the secretariat of the NERC,” said Khadga Bahadur Bisht, immediate past president of the Independent Power Producers’ Association Nepal. The commission is expected to be a powerful body which will take over regulatory functions of Nepal Electricity Authority (NEA), the state-owned power utility. For example, the commission will have the full mandate to approve the rate at which power utilities purchase electricity from hydropower project developers. At present, NEA is the sole buyer of electricity in Nepal and it has been fixing the rate for purchase of electricity from hydropower project developers.

The commission will also fix tariff for consumers of electricity, a work which is currently performed by Tariff Fixation Committee. This implies the committee will be scrapped after formation of the commission. The Act also contains a provision that allows the commission to fix the electricity tariff after holding a public hearing.

The commission will also establish a code that various entities under its jurisdiction will have to follow. The code will specify standards for construction of hydropower plants, transmission lines and distribution networks. It will also determine the voltage of electricity that will be supplied to customers.

Source: The Kathmandu Post