KATHMANDU, June 19: In a major policy shift, the government has decided to allow private hydropower producers to sell electricity directly to their clients, breaking the long-standing monopoly of the Nepal Electricity Authority (NEA) in the power trade.
On Wednesday, the Electricity Regulatory Commission (ERC) unveiled the draft of Open Access Directive 2025, which aims to facilitate private sector participation in electricity sales. The ERC has given stakeholders 30 days to submit feedback before finalizing the directive.
Once approved, the directive will enable large firms to purchase electricity directly from private producers, bypassing the NEA. According to the draft, private producers will be allowed to use NEA’s transmission lines by paying applicable distribution fees, wheeling charges, and deviation settlement costs.
ERC Chairperson Ram Prasad Dhital said the new directive seeks to expand open access to transmission and distribution networks. “This will attract more investment into Nepal’s power sector, promote competition, reduce risks for service providers, and open the door for the private sector to enter international power markets,” Dhital told Republica.
Currently, while private firms can generate electricity, they are not permitted to sell it directly to clients, nor can they build their own transmission infrastructure. The directive would change that, allowing captive power plants with a minimum capacity of 1 MW and contract energy projects of 5 MW or more connected to 33 kV transmission lines to sell electricity directly to manufacturing and commercial enterprises.
For cross-border sales, private producers must supply at least 10 MW to foreign buyers. The directive proposes designating NEA’s System Operation Department as the nodal agency for overseeing these transactions.
In recent years, the government has gradually introduced more flexible policies to encourage private sector involvement in electricity distribution. Last December, the Ministry of Energy, Water Resources and Irrigation signed a public-private partnership (PPP) agreement with private firms to jointly develop transmission infrastructure, although the private sector is still awaiting permission to build its own lines.
Nepal’s push to liberalize the power market comes amid growing regional trade opportunities. The country recently signed a long-term agreement with India to export 10,000 MW of electricity over the next decade. Bangladesh, meanwhile, plans to import 9,000 MW of clean energy from Nepal by 2040 and has already begun purchasing 40 MW.
To meet its ambitious target of generating 28,500 MW of electricity by 2035, the government is relying on private sector participation, recognizing that the NEA alone cannot build the required transmission capacity.
Source: Republica
