The Parliament today endorsed the Nepal Electricity Regulatory Commission (NERC) Bill, which has paved the way to form a regulatory body to oversee the companies involved in generation, distribution, transmission and trading of the electricity.

The regulatory body will frame the required rules to regulate the players in the power sector. It will develop the grid code, procedure for the operationalisation of electricity service and its maintenance, fix standards for the quality and safety of the national grid, among others.

The independent commission would also regulate the power purchase agreements, set up conditions in granting licences, electricity tariff, among others. As per a provision in the bill, the regulator would also create a competitive environment in electricity tariff (in both purchase and sales).

The regulatory body would also work to settle the disputes among the licence holders of the electricity generation, distribution, transmission and trade.

The government can appoint the chairman of the commission and four members for five years as per the qualifications mentioned in the bill. The chairman should have academic qualification of a Masters degree and 20 years of experience in the related field.

The need of a regulatory body in the power sector has been identified since the country opened private investment in the sector along with adoption of liberal economic policies in the 1990s.

Though the government has allowed private investment in the power sector, private investment has been limited only to power generation. Private investors seem reluctant to invest in distribution, transmission and trading. The government has also prioritised developing a transmission line through state or state-controlled entities to lower the cost of the electricity.

The bill passed by House today will come into force within 91 days after the president authenticates it.