Kathmandu: Stakeholders in the energy sector have said that expanding electricity trading is essential to market domestically and internationally the electricity produced in Nepal. Speaking at the Friday Forum organized by the Independent Power Producers’ Association, Nepal (IPPAN), they said private-sector participation in electricity trading is essential both to end the current situation of electricity being wasted and to protect the billions of rupees already invested in power generation for the future.
Speakers at the event said hydropower generation in Nepal is growing rapidly and that competitive electricity trading will play an important role in ensuring its systematic consumption and export. They said large-scale electricity trading cannot be handled by a single entity or limited structure alone and that the private sector should also be allowed to participate in electricity trading. They maintained that licenses for electricity trading can be issued within the existing legal framework and stressed that the process should not be delayed.
Energy Minister Biraj Bhakta Shrestha said the government is moving forward with the objective of promoting the private sector. “The government wants to move forward in cooperation with the private sector,” Shrestha said. “We are working to form a high-level committee to collaborate with you.”
At the event, former Deputy Managing Director of the Nepal Electricity Authority (NEA), Prabal Adhikari, presented a paper on “Nepal–India Electricity Trade: The Way Forward for the Private Sector.” A committee coordinated by former Energy Secretary Dinesh Ghimire has also concluded that licenses can be issued under the Electricity Act, 1992. Adhikari said there is no obstacle to granting licenses to the private sector, as the government has already approved the Nepal Power Trading Company Limited (NPTC), a subsidiary of the Nepal Electricity Authority, through a Cabinet decision.
Adhikari said that although the term “electricity trading” is not explicitly mentioned, permission has already been granted to a subsidiary of the Authority. Section 21 of the Electricity Act, 1992, states that if a producer wants to sell all the electricity it generates, the government may purchase or arrange for its purchase by incorporating it into the national grid. The electricity tariff will be determined as prescribed by the Electricity Regulatory Commission. Section 22 of the Act states that a licensed entity wishing to import and distribute electricity within Nepal may do so after obtaining prior approval from the Government of Nepal as prescribed.
Calling electricity trading a complex issue, Adhikari argued that government investment alone would not be sufficient for distribution and transmission infrastructure. “Electricity trading is a complex issue, so it is not possible to conduct electricity trading through just one government entity,” he said.
Former Energy Secretary Anup Kumar Upadhyay said attempts had previously been made to issue licenses to the private sector, but the process was halted due to the lack of a stable government. “There had been repeated preparations to introduce legislation for issuing power trading licenses, but decisions could not be made because governments changed during the decision-making process,” he said. “Hopefully, a decision will now be made. There is no doubt that power trading licenses should be issued.”
Ram Prasad Dhital, chairman of the Electricity Regulatory Commission, said the transmission tariff would be finalized and made public in the first week of Bhadra. “When we initially brought the open-access directive, we had planned to complete all the standards and other requirements within a month. However, that could not happen as planned,” he said. He also said there could be a conflict of interest when the same institution is involved in generation, distribution and transmission. Once the open-access directive is issued, he said, power projects will have the opportunity to directly seek customers.
“We had planned to introduce the subsidiary directives required for the open-access directive within 120 days. It was delayed for various reasons. We are now working to complete the process by the first week of Bhadra.”
Energy Minister’s Adviser Bibek Raj Kandel said electricity should be focused not only on access but also on utilization and trade. “We should not treat electricity merely as a matter of access. It should be focused on utilization and trade,” he said.
IPPAN Chairman Mohan Kumar Dangi said the electricity sector would make a major leap in trading as it did in generation if the private sector is granted power trading licenses. “The Electricity Act, 1992 led to a major leap in electricity generation. Today, the private sector contributes around 80 percent of generation,” Dangi said. “Once the private sector is granted licenses for electricity trading, there will also be a major leap in cross-border electricity trade.”
Sagar Shrestha, CEO of the Rastriya Prasaran Grid Company Limited (RPGCL), said NPR 600 billion would be required over the next 10 years. “We are preparing a transmission line master plan. Based on the Energy Development Roadmap, we estimate that NPR 600 billion will be required for the transmission infrastructure we need and the associated requirements,” he said.
IPPAN former Vice Chairman Ashish Garg said the private sector is ready to buy and sell electricity if the government grants power trading licenses to private companies. “We registered Nepal Power Exchange Company in 2018 to trade electricity. We are clear about what this company will do,” Garg said. “We can sell surplus electricity generated in Nepal to India and purchase electricity from India when Nepal needs it.”
Energy Secretary Sarita Duwadi said the ministry is committed to opening the way for private-sector participation in transmission and distribution. “Today’s discussion focused on the need for private-sector participation not only in generation but also in transmission and distribution. The ministry is committed to this,” she said. “The ministry is working accordingly to open the way for the private sector to engage in electricity trading.”
NEA Acting Executive Director Dirghayu Kumar Shrestha said the Authority is positive about the entry of additional power trading companies. “The Authority has been conducting electricity trading through a trading company. The Nepal Electricity Authority will never take a narrow view on the need for additional trading companies,” he said. “We have always been positive about the entry of private-sector trading companies.” He added that the Authority is ready to move forward by sharing risks with the private sector.
IPPAN and Grid Company sign cooperation agreement
The Independent Power Producers’ Association, Nepal (IPPAN) and Rastriya Prasaran Grid Company Limited have reached an agreement to cooperate. The agreement focuses on long-term public-private cooperation for the development of transmission infrastructure. IPPAN Chairman Mohan Kumar Dangi and RPGCL CEO Sagar Shrestha signed the memorandum of understanding.
Urjasanchar
