Private power firms cleared to prepare for cross-border electricity trade

Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha decided on Friday, 16 October, to issue letters of intent giving private companies in-principle approval to prepare for cross-border electricity trading. Private developers have long been able to build and run generation projects, but there was no clear route for them to take part in trade across the border.

Holders of a letter may look for buyers and partners in Nepal and abroad, study market feasibility and draft the agreements they would need. They may not import, export or trade electricity, sign power purchase deals or book transmission capacity until they obtain the necessary licences and approvals and meet technical requirements, Onlinekhabar and Republica reported.

Strings attached

Applicants must declare that they are not blacklisted and that the information they submit is accurate. They must file progress reports with the ministry within 15 days of the end of each quarter. The government may suspend, amend or revoke a letter if conditions are breached, if information proves false, or where public interest or the safe operation of the grid requires it. Letters are valid for up to two years, and extensions must be sought at least 30 days before expiry.

A letter does not confer an automatic right to a trading licence, and agreements a company signs with partners create no liability for the state.

The move answers a long-standing demand from the private sector. The Kathmandu Post reported in August that Nepal Power Exchange, registered by the Independent Power Producers' Association in 2018, had signed agreements with India's Manikaran Power in 2021 and 2023 covering up to 700 MW in total, but that these had stayed on paper without a licence. As generation grows, finding markets for surplus power is becoming more pressing, though Republica noted that the real effect will depend on legal procedures, transmission infrastructure and market development.

Sources

Onlinekhabar English (external link); Republica (external link); The Kathmandu Post (external link)