Kathmandu: The power purchase agreement (PPA) process initiated by the Nepal Electricity Authority for the development of solar energy projects under local government investment has come under controversy. Stakeholders have raised concerns over the transparency and fairness of the process after the pathway for company registration and share ownership was opened only as the application deadline approached.
The authority has issued a notice requiring applications to be submitted by May 11, for the development of solar projects of up to 1 MW with majority ownership by local governments. However, the Office of the Company Registrar under the Ministry of Industry, Commerce and Supplies, through a decision made on May 8, allowed local governments to register companies and acquire shares to take ownership in such companies.
This has effectively left interested parties with only two days to complete the necessary procedures. Moreover, with Sunday being a public holiday in Nepal, only one working day remains. According to stakeholders in the energy sector, it is practically impossible to complete company registration, finalize share structures, secure decisions from local governments, prepare memorandum and articles of association, obtain tax clearance, conduct feasibility studies, arrange financing, and prepare technical documents within such a short period.
This has further strengthened suspicions that the process was designed to favor only a limited group that had already completed prior preparations. According to stakeholders, although the notice was issued in the name of open competition, the implementation framework has effectively created a situation where new investors and most local governments are automatically excluded.
The authority has called for applications, stating that direct grid connection and “T-connection” facilities will be provided through the 33/11 kV system. However, complaints have been raised that the process has become extremely complicated because applicants are required, even at the application stage, to submit a company registration certificate, updated details showing at least 51 percent share ownership by local governments, records of directors, memorandum and articles of association, tax clearance certificate, electricity survey license, generation license, feasibility study report, and construction schedule.
According to energy entrepreneurs, such projects are generally implemented through a phased process. Although international practice is to request detailed technical and financial documents only after preliminary selection, the model applied here requires applicants to “complete all preparations before applying.” They argue that this approach benefits only those groups that were already financially and technically prepared in advance.
Serious questions have also been raised over the timeline. Stakeholders say that feasibility studies, financial arrangements, and legal procedures generally take months to complete, and providing only a few weeks has effectively pushed new entrants out of the process automatically.
While the provision requiring local governments to hold at least 51 percent ownership has been viewed positively, concerns have been expressed that most municipalities lack the technical capacity, financial preparedness, and fast decision-making mechanisms needed in practice. As a result, they risk becoming “nominal partners” rather than genuine lead investors.
Pricing has emerged as another major point of controversy. Energy sector experts argue that the fixed tariff rate of Rs 4.99 per unit set by the Electricity Regulatory Commission is unrealistic under current market conditions. They say the continuously rising costs of solar panels, structural materials, and transportation could make small and decentralized solar projects financially unviable under a fixed-rate model.
Stakeholders have demanded that the application period be extended by at least six months to one year, that the process be implemented in phases, and that the PPA tariff be reviewed. Otherwise, they warn that the goals of local energy self-reliance, decentralized energy development, and broader participation could end up being limited to only a small group with privileged access.
According to energy sector analysts, although the program appears positive from a policy perspective, its implementation has dragged it into controversy. They conclude that the limited timeline, complicated procedures, and the last-minute opening of company registration provisions have raised serious questions about the government’s commitment to good governance, transparency, and fair competition.
Urjasanchar