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Despite the growth in hydropower generation, private sector participation in transmission line construction has been stalled due to legal ambiguity surrounding the transfer of licences.
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The bidding process for four NEA transmission lines has remained stuck in the evaluation stage for five months, while construction of the West Seti transmission line has been delayed due to the failure to transfer the licence to its SPV.
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Government delays have affected efforts to develop transmission infrastructure through private investment and risk-sharing, raising concerns over grid expansion and economic development, particularly in Sudurpaschim Province.
Kathmandu — As hydropower generation capacity continues to grow rapidly across the country, efforts to involve the private sector in transmission line construction have become entangled in legal ambiguities. The lack of clear provisions for transferring transmission line licences issued in the names of government agencies to private companies or special purpose vehicles (SPVs) has created uncertainty in the implementation process.
The Nepal Electricity Authority (NEA) plans to construct transmission lines under the Tariff-Based Competitive Bidding (TBCB) framework. According to the authority, the transmission lines will be developed under the Build, Operate and Transfer (BOT) model. Meanwhile, the National Transmission Grid Company Limited (RPGCL) has been seeking to develop the West Seti transmission line under the Public-Private Partnership (PPP) model. However, the process has failed to gain momentum due to the inability to transfer the licence.
Section 8 of the Electricity Act, 1992, states that a person holding a licence cannot sell or transfer it in any other manner without obtaining approval from the Government of Nepal. However, the licence can be transferred with government approval. Under Rule 25 of the Electricity Regulations, 1993, a developer seeking to sell or transfer a licence must submit an application along with clear reasons for the transfer, the identity and company registration certificate of the buyer, documents demonstrating its financial standing and technical capacity, and the agreement between the two parties.
Similarly, Chapter 7 of the Directive on Licensing of Electricity Projects, 2018, requires developers to fulfil various criteria to sell or transfer licences for electricity generation and transmission. To transfer a survey licence, applicants must submit an approved Terms of Reference (ToR) for the environmental study and documents demonstrating the financial capacity of the company acquiring the licence.
However, the directive allows a licence to be transferred to another company in which the existing company holds a 25 percent ownership stake, subject to the submission of documents demonstrating the prescribed financial capacity. For the transfer of generation and transmission licences, both companies must submit board decisions, tax clearance certificates, audit reports, company registration documents and self-declarations confirming that they are not blacklisted. Only after these documents are submitted can in-principle approval be granted.
Despite these provisions, no licence transfers have taken place so far, as the process has yet to be implemented in practice. This legal bottleneck has left the letters of intent (LoIs) for four major transmission lines that the NEA plans to develop under the TBCB model stuck in the evaluation process for five months.
On March 12, 2026, the NEA issued a notice inviting expressions of interest for four transmission lines: Sheetalpati (Arun Hub)–Inaruwa (400 kV, 95 km) in Sunsari and Sankhuwasabha; Tingla–New Khimti–Sunkoshi–Dhalkebar (400 kV, 133.99 km); Dandakhet–Burtibang (132 kV, 33 km) in Myagdi and Baglung; and Ridi–Tamghas (132 kV, 28 km) in Palpa and Gulmi.
By the June 9, 2026 deadline, a total of 18 companies and joint ventures from Nepal, India, China and the United States had submitted their expressions of interest. However, the evaluation process has not been completed.
According to Nawaraj Ojha, deputy executive director of the NEA’s Transmission Directorate, policy-level facilitation from the Ministry of Energy is needed to determine how licences currently held in the authority’s name can be transferred to successful bidders or SPVs.
“The licence transfer and evaluation processes need to move forward simultaneously. There is little point in selecting bidders if we cannot issue the licences,” he said. “That is why we intend to carry out both processes together.”
The NEA had initiated the process on the condition that it would bear the risk associated with electricity transmission, while the selected private company would operate the transmission line for 20 years before handing it back to the authority.
Similarly, RPGCL has initiated the West Seti 400 kV Transmission Line under the PPP model to connect major hydropower projects in western Nepal to the national grid. The approximately 145-kilometre transmission line will run from Chainpur in Bajhang to Dododhara in Kailali. A special purpose company named West Seti Transmission Limited was registered on May 27, 2026 to develop the project.
The project is estimated to cost around Rs 20 billion, with 30 percent financing through equity and 70 percent through debt. Under the company’s shareholding structure, RPGCL holds 26 percent, Chilime holds 12.5 percent and Chainpur Seti holds 12.5 percent, giving government-linked entities a combined ownership of 51 percent.
On the private-sector side, Samriddhi Energy holds 25.1 percent, Ngadi Group Power holds 7 percent and Syuri Ngadi Power holds 6.9 percent, accounting for a combined 39 percent. The remaining 10 percent has been allocated for the general public.
The 2,500 MW transmission line is targeted for completion within five years. It will carry electricity generated by projects including the 750 MW West Seti, 450 MW Seti River-6 and 170 MW Upper Seti hydropower projects. However, construction has yet to gain momentum because the licence, currently held in RPGCL’s name, has not been transferred.
RPGCL Chief Executive Officer Sagar Shrestha said the company has been unable to transfer the licence to the SPV due to policy uncertainty. Discussions are underway with the Ministry and the Department of Electricity Development to resolve the issue, he said.
RPGCL has already written to the Department of Electricity Development seeking the transfer of the West Seti transmission line licence under Chapter 7 of the Directive on Licensing of Electricity Projects, 2018.
Director General of the Department of Electricity Development, Jeevachha Mandal, said he had not received any such files since assuming office and that he would need to discuss the matter with the concerned staff.
Former president of the Independent Power Producers’ Association, Nepal (IPPAN), Shailendra Guragain, said government agencies have caused excessive delays in transferring transmission line licences.
He complained that despite a considerable amount of time having passed since RPGCL and other collaborative projects submitted applications to transfer licences to newly established companies, the Department of Electricity Development has yet to move the process forward.
“RPGCL, Chainpur Seti and Chilime Seti projects have jointly established a new company and have already arranged the required equity investment,” he said. “Under the initial agreement, the licence held in RPGCL’s name was supposed to be transferred to the new company, but that has still not happened.”
He said the government’s reluctance to grant approval, despite the private sector being ready to build transmission lines using its own investment, effort and risk without placing any financial burden on the state treasury, reflects a policy contradiction.
“Laws, regulations and the Constitution are meant for the people. If they do not serve the people, they must be changed,” Guragain said.
He particularly pointed out that the Sudurpaschim region has been left far behind in terms of transmission infrastructure. Although 4,500 MW of electricity is expected to be connected to the national grid from the region, only 75 MW has been connected so far, he said.
Guragain warned that administrative obstacles of this kind could undermine the country’s overall economic development, particularly at a time when the energy sector needs to move forward rapidly.
Kantipur
