Kathmandu: The Independent Power Producers’ Association of Nepal (IPPAN) has called for the immediate implementation of the legal and regulatory framework necessary to allow the private sector to participate in electricity trading. The association submitted a 12-point memorandum to the Electricity Regulatory Commission (ERC), urging reforms ranging from the implementation of open access in the electricity transmission and distribution system to allowing private companies to engage in bilateral electricity trade.
An IPPAN delegation led by President Mohan Kumar Dangi visited the Commission to congratulate newly appointed ERC Chairman Dr. Ram Prasad Dhital and members Jayaraj Bhandari, Lokraj Pathak, and Balram Silwal on their appointments and wish them a successful tenure. During the meeting, the delegation highlighted the need for policy and regulatory reforms to support the development and expansion of Nepal’s electricity sector and create a private sector-friendly investment environment.
Speaking on the occasion, IPPAN President Mohan Kumar Dangi emphasized that the Regulatory Commission should play a facilitative role in the development and expansion of the electricity sector. He said continuous dialogue and cooperation between the Commission and the private sector are essential to resolve the policy and implementation challenges faced by privately developed projects.
According to Dangi, the Commission should focus on long-term policy reforms rather than minor procedural matters. He added that the Commission has an important role in creating an environment where the energy sector can contribute to Nepal’s economic prosperity.
In its memorandum, IPPAN urged the Commission to prioritize the implementation of open access in the transmission and distribution network, allow private companies to conduct bilateral electricity trade, prepare internationally bankable Power Purchase Agreement (PPA) templates, establish a dispute resolution mechanism, and simplify, make transparent, and time-bound the approval process.
IPPAN also requested a compensation mechanism for project developers affected by delays in transmission line construction by the Nepal Electricity Authority (NEA). It further called for clear policies on Take-and-Pay and Contingency PPAs, elimination of duplicate approval requirements at the Commission for credit rating and underwriting processes already approved by the Securities Board of Nepal (SEBON), and the issuance of clear guidelines governing mergers, acquisitions, cross-holdings, and share swaps involving hydropower companies.
The association also urged the Commission to make the pre-approval guidelines for Initial Public Offerings (IPOs) more practical by recognizing PPA validity periods, license durations, and investments made through subsidiary companies. It further sought private sector-friendly corporate governance standards and a dedicated regulatory framework for reservoir-based and pumped-storage hydropower projects, including appropriate PPAs, cost-based reasonable returns, recognition of energy storage, and necessary incentives.
Speaking at the event, ERC Chairman Dr. Ram Prasad Dhital acknowledged that the private sector is a key partner in the development of Nepal’s electricity sector and pledged that the Commission would prioritize cooperation, dialogue, and coordination with private investors.
He said the Commission’s objective extends beyond regulation to include promoting the sustainable development of the electricity sector, encouraging investment, and protecting consumer interests. He assured participants that the Commission would positively review the recommendations submitted by the private sector and initiate the necessary regulatory improvements.
Chairman Dhital also stressed that regular dialogue between the Commission and the private sector is essential to resolve the complex challenges facing the electricity sector. He said the Commission would continue working with all stakeholders to build a transparent, predictable, and investment-friendly regulatory environment.
IPPAN’s 12 Key Demands to the Electricity Regulatory Commission
1. Implement Open Access: Immediately enforce the necessary guidelines, wheeling charges, and clear grid-use regulations to facilitate open access in the electricity transmission and distribution system.
2. Establish a Dispute Resolution Mechanism: Create an effective mechanism to resolve disputes among project developers, the Nepal Electricity Authority (NEA), and other stakeholders.
3. Streamline Approval Processes: Simplify, enhance transparency, and make the Commission’s approval and authorization procedures time-bound.
4. Allow Bilateral Electricity Trading: Introduce the legal and regulatory framework necessary to enable private sector participation in bilateral (business-to-business) electricity trading.
5. Adopt Bankable PPAs: Develop and implement internationally bankable Power Purchase Agreement (PPA) templates in line with global best practices.
6. Provide Compensation for Transmission Delays: Establish a fair compensation mechanism for financial losses incurred by projects due to delays in transmission line construction.
7. Issue Clear Policies on ‘Take-and-Pay’ and Contingency PPAs: Publish clear policies and guidelines governing Take-and-Pay and Contingency Power Purchase Agreements.
8. Eliminate Duplicate Regulatory Procedures: Ensure that credit rating and underwriting processes already approved by the Securities Board of Nepal (SEBON) are not required to undergo duplicate approval at the Commission.
9. Clarify Rules on Corporate Restructuring: Issue clear guidelines on mergers, acquisitions, cross-holdings, and share swaps involving hydropower companies, ensuring consistency with the Companies Act and securities laws.
10. Revise IPO Pre-Approval Guidelines: Amend the pre-approval guidelines for Initial Public Offerings (IPOs) to practically recognize PPA validity periods, license durations, and investments made through subsidiary companies.
11. Make Corporate Governance Standards More Private Sector-Friendly: Revise corporate governance requirements for licensed companies by introducing practical provisions related to procurement procedures, participation of related companies, and board governance.
12. Introduce a Dedicated Regulatory Framework for Reservoir and Pumped Storage Projects: Establish clear regulations for reservoir-based and pumped-storage hydropower projects, including appropriate PPAs, cost-based reasonable returns, recognition of energy storage, and necessary incentives.
Jalasarokar
