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The Independent Power Producers’ Association, Nepal (IPPAN) has called for the introduction of a new Electricity Bill that would make the private sector a full-fledged partner in the energy sector.

A delegation led by IPPAN President Mohan Kumar Dangi met with Rastriya Swatantra Party (RSP) President Rabi Lamichhane and briefed him on the immediate policy and legal reforms needed for the development and expansion of the energy sector and for creating an investment-friendly environment.

IPPAN said the Electricity Act, 1992 was enacted at a time when private sector participation in the electricity sector was still at an early stage, and that a new legal framework is now necessary to address the needs of the current energy sector. Through a new Electricity Bill, IPPAN has demanded that the private sector not be limited to power generation but be given equal opportunities in transmission, electricity trading, energy storage, green hydrogen, carbon trading and innovative technologies as well.

IPPAN has also demanded the immediate reopening of power purchase agreements (PPAs) for projects with a combined capacity of around 17,000 MW that have remained stalled for a long time. According to IPPAN, the delay in signing PPAs for projects that have completed their studies and are ready for investment has left private investment idle, disrupted the investment cycle in the banking system and slowed the expansion of electricity generation.

IPPAN said PPAs must be concluded on time for new projects if the government is to achieve its target of generating 30,000 MW of electricity within 10 years.

Private Sector Entry into Transmission and Power Trading

Arguing that transmission infrastructure has not been developed at the expected pace compared with power generation, IPPAN has called for private sector participation in transmission line construction as well. IPPAN said some projects have been unable to operate at full capacity even after completing construction due to a lack of transmission infrastructure. It said that if electricity generation is to increase over the coming decade, the construction of transmission infrastructure should not remain the sole responsibility of the government.

Similarly, IPPAN has called for legal provisions to ensure private sector participation in electricity trading. As electricity generation continues to increase in Nepal, the surplus after domestic consumption will need to be exported, making private sector participation necessary for large-scale electricity trading and cross-border transactions, IPPAN said.

IPPAN said legal provisions should be introduced to allow the private sector to participate in electricity imports, exports and cross-border power trading, which would help Nepal achieve its goal of becoming a major supplier of clean energy in South Asia.

Calls for Reforms in Forest, Land and Approval Processes

IPPAN has also called for a long-term solution to obstacles related to forests, the environment and land management in the development of energy infrastructure.

Delays in the use of forest areas, tree cutting, environmental impact assessments, land acquisition and obtaining approvals from various agencies have increased project costs and construction timelines, IPPAN said. It called for a one-stop system, time-bound approval procedures, predetermined standards and effective coordination among government agencies.

IPPAN has also proposed keeping the area within one kilometer on either side of riverbanks outside conservation areas to facilitate the construction of electricity and other infrastructure.

Similarly, IPPAN has called for hydropower projects to be recognized as nationally prioritized infrastructure and for project security and investment protection to be given priority. It said an effective mechanism is needed to provide a long-term solution to disruptions, forced shutdowns, vandalism, local disputes and security incidents occurring during project construction.

Clarification of the Jurisdiction of Three Tiers of Government

IPPAN has also called for clear demarcation of the jurisdictions of the federal, provincial and local governments regarding the development of electricity projects. According to IPPAN, the lack of clarity over the authority of the three tiers of government has resulted in duplication, unnecessary obstacles and opposition during project development.

IPPAN said legal provisions clearly defining jurisdictions could reduce the time and cost required for project construction.

IPPAN President Dangi said the private sector is ready to invest to help achieve the target of generating 30,000 MW of electricity within 10 years, as outlined in the RSP’s election manifesto and pursued by the government led by the party.

“The government and the party have both set a target of generating 30,000 MW, and the private sector is ready to invest to achieve that target,” Dangi said. “For this, we expect appropriate policies. From the Electricity Bill to resolving forest-related problems and PPAs, we want the government’s support.”

‘We Will Not Allow the Private Sector to Operate in an Unsafe Environment’

RSP President Lamichhane said his party and government would not compromise on promoting private sector investment.

“Businesses operated by the private sector have made a major contribution to the country’s economy and employment,” Lamichhane said. “If anyone acts in a way that makes this sector unsafe, the government will take action without leaving any offense unaddressed.”

He said it is the government’s responsibility to increase domestic private investment and achieve economic prosperity.

Lamichhane said private sector participation in electricity trading and transmission line development is not merely necessary but indispensable.

Jalasarokar