By A Staff Reporter, Kathmandu, Aug. 16: Stakeholders have called for greater private sector’s participation in electricity trading, saying additional power trading companies are essential to promote the domestic and international marketing of electricity generated in Nepal.
Speaking at the Friday Forum organised by the Independent Power Producers’ Association, Nepal (IPPAN), they said private-sector involvement in power trading was necessary to address the growing problem of electricity wastage and safeguard the billions of rupees invested in power generation.
They said that hydropower generation was expanding rapidly and that a competitive power trading market would help ensure systematic consumption and export of electricity.
The large-scale electricity trading could not be handled by a single entity or through limited institutional arrangements and that the private sector should be allowed to obtain power trading licences, they said.
They also maintained that licences could be issued under the existing legal framework and urged the government not to delay the process.
Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha said the government was moving ahead with a focus on promoting the private sector. “The government wants to move forward in collaboration with the private sector,” Shrestha said. “We are working to form a high-level committee to collaborate with the private sector.”
Former deputy managing director of the Nepal Electricity Authority (NEA) Prabal Adhikari presented a paper on ‘Nepal-India Electricity Trade: The Way Forward for the Private Sector’ at the programme.
Adhikari said there was no legal obstacle to issuing licences to private companies, as the Cabinet had already approved the Nepal Power Trading Company Limited (NPTC), a subsidiary of the Nepal Electricity Authority, for power trading.
Although the term ‘electricity trading’ is not explicitly mentioned in the Act, the government has already granted permission to the authority’s subsidiary, he said.
Section 21 of the Electricity Act, 2049 states that if a producer wishes to sell all the electricity it generates at once, the government may purchase or arrange for its purchase by incorporating it into the national grid. The tariff for such electricity shall be determined as prescribed by the Electricity Regulatory Commission.
Arguing that electricity trading is a complex issue, Adhikari said that the government investment alone would not be sufficient for transmission and distribution infrastructure.
“Electricity trading is a complex issue, so it is not possible to conduct electricity trading through just one government entity,” he said.
Energy Secretary Sarita Dawadi said the ministry was committed to opening the way for private-sector participation in transmission and distribution.
“Today’s discussion focused on the need for private-sector participation in transmission and distribution along with generation. The ministry is committed to this,” she said. “The ministry is working accordingly to open the way for private-sector participation in electricity trading.”
Former secretary Anup Kumar Upadhyay said efforts had previously been made to issue licences to the private sector but were stalled due to the lack of a stable government.
“There had been repeated preparations to introduce legislation for granting power trading licences, but decisions could not be taken because governments changed during the process,” he said. “Now, hopefully, a decision will be made. There is no doubt that power trading licences should be issued.”
Ram Prasad Dhital, chairman of the Electricity Regulatory Commission, said the transmission charge would be determined and made public in the first week of Bhadra.
“When the open access guidelines were first introduced, there was a plan to meet all the criteria within a month. But that did not happen,” he said. He also said that there could be a conflict of interest if the same organisation is responsible for production, distribution and transmission. He said that the issuance of the open access directive would pave the way for power projects to directly seek customers.
“We had planned to introduce the supplementary directives required for open access within 120 days. It was delayed for various reasons. We are now working to introduce them by the first week of Bhadra,” he said.
Acting Managing Director of the Nepal Electricity Authority Dirghayu Kumar Shrestha said that the authority was positive about the entry of additional power trading companies.
“The NEA has been conducting electricity trading through its trading company. The authority has never been narrow-minded about the need for additional trading companies,” he said. “We have always been positive about the entry of private-sector trading companies.”
He said the NEA was ready to move forward by sharing risks with the private sector.
IPPAN president Mohan Kumar Dangi said the power trading sector would make a major leap forward if the private sector were granted power trading licences, just as it had in electricity generation.
“The Electricity Act, 2049 brought a major breakthrough in power generation. The private sector now accounts for around 80 per cent of electricity generation,” Dangi said.
“Granting licences to the private sector for electricity trading would also bring a major breakthrough in cross-border electricity trade.”
Sagar Shrestha, Chief Executive Office of the Rastriya Prasaran Grid Company, said around Rs. 600 billion would be required over the next 10 years.
“We are preparing a master plan for transmission lines. Based on the energy development roadmap, we have estimated that Rs. 600 billion will be required for the transmission infrastructure we need and the necessary arrangements,” he said.