Regulatory body struggles with teething problems


Officials of the newly formed Nepal Electricity Regulatory Commission spent the first week at their new job scrambling to arrange office space and furniture.

The commission, a powerful body set up to govern the energy sector, is mandated to fix tariffs, set construction and safety standards, establish codes governing hydropower plants, the electricity authority, transmission lines and distribution networks.

The government finally established the commission after much delay, but it lacks a budget and office space.

The government appointed five office bearers to the Nepal Electricity Regulatory Commission nearly two years after Parliament passed legislation in August 2017, paving the way for its establishment to replace the Electricity Tariff Fixation Commission.

“It has been a week since we are running here and there trying to manage resources,” said Ram Prasad Dhital, a member of the commission.

“We are planning to develop guidelines, identify overlapping laws and issue directives, but for that we need to have resources first.”

The government had allocated Rs6.1 million in this fiscal’s budget for the commission, but it has not released the funds yet, said officials.

“The energy minister has asked us to work at a fast pace, but we do not have even an official to file documents or register petitions,” said Dilli Bahadur Singh, chairman of the commission.

“We plan to work on managing resources and a proper office for the final two months of this fiscal year.”

Stakeholders said problems pertaining to tariff revision and fixation, power purchase agreements, and market guiding provisions must be resolved soon.

Officials of the Nepal Electricity Authority are working to resolve a tariff dispute with industrialists as they are forced to charge rates set in 2015.

The state-owned power utility is not authorised to fix electricity tariffs; and since the Electricity Tariff Fixation Commission has been dissolved, the rates have not been changed even though more power has been added to the national grid.

“There is no more load shedding in the country, so the dedicated feeder and trunk lines provided to industries must be replaced, and the tariffs must be revised in line with fair pricing policies,” said Kulman Ghising, managing director of the Nepal Electricity Authority.

“Also, there are independent producers developing hydel plants with a combined installed capacity of around 7,000 MW, and the power purchase agreement rates with private producers must be now changed from fixed to competitive rates.”

In the absence of the commission, the electricity authority had been fixing the power purchase agreement rates with independent power producers. The producers say this is against the norms of a fair market as the electricity authority itself is a power producer.

“The commission must work to make the market fairer for independent producers, and the electricity authority also should be guided,” said Shailendra Guragain, president of the Independent Power Producers’ Association of Nepal. Energy sector experts say private producers must also be kept in check as they have pooled money from the investing public.

“Everyone is focusing on the scale of the project and finances and the power generation capacity, but without a proper authority to regulate the sector, the energy produced in the country cannot be marketed as per present expectations, and that will lead to losses in the billions,” an expert said.

Commission officials say they are determined to make the power market a level playing field and will make an in-depth study of the issues first. “We are aware of the economic issues pertaining to the consumption of surplus energy, investment and return model in the hydro sector, and resolution of conflicts between the utility and industrial consumers,” said Dhital. “We will try to address the issues as soon as possible.”

Source : The Kathmandu Post