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The government’s new provisions aimed at streamlining the construction permit (licensing) process in the energy sector have, on one hand, shown efforts to address infrastructure-related problems, but on the other hand, appear to have further deepened legal and policy conflicts.

Through a recently issued directive, the government is preparing to make “grid evacuation” a precondition for obtaining construction permits. The main objective is to prevent the wastage of generated electricity due to the lack of transmission lines and to ensure systematic power flow.

For this purpose, the grid department of the Nepal Electricity Authority and the National Transmission Grid Company Limited have been assigned to jointly ensure the technical feasibility of transmission routes and substation capacity.

However, this move has raised serious legal questions. Experts and stakeholders argue that restricting or overriding rights clearly granted by law through a general administrative directive goes against legal principles. They say that if such policy changes are necessary, they must be implemented only through amendments to the relevant acts or regulations.

“Rights granted by law cannot be taken away through directives. This raises serious questions about governance and transparency. Investors should not be left in uncertainty in the name of streamlining the licensing process,” said an energy promoter.

While this reflects executive activism in policymaking, it also raises concerns about the weakening role of the legislature. As a result, questions are being raised about governance, transparency, and policy stability.

From a technical perspective, however, making “grid evacuation” a precondition is considered positive for energy system management. Until now, licenses were issued without adequate assessment of transmission capacity, leading to many projects remaining on paper, power purchase agreements not translating into actual electricity flow, and increased investment risks. Therefore, ensuring transmission infrastructure before issuing new permits could be practical in the long term.

The challenge, however, lies in policy implementation clarity and transition management. The decision to prepare a list of projects that already have licenses but lack grid connectivity could create uncertainty among investors. If not managed in a transparent, phased, and predictable manner, it may negatively affect the investment environment.

Overall, while this is an effort toward structural reform in the energy sector, its successful implementation will require a careful balance of legal clarity, institutional coordination, and maintaining investor confidence.

Urjasanchar