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The government has opened Nepal’s national electricity transmission grid to the private sector, allowing private power producers and consumers to use existing transmission infrastructure by paying a wheeling charge.

The Electricity Regulatory Commission (ERC), under the Ministry of Energy, Water Resources and Irrigation, announced the transmission charges on Thursday in the presence of Energy Minister Biraj Bhakta Shrestha. The move is aimed at bringing the private sector into electricity trading and introducing open access to the transmission network.

With the wheeling charge now fixed, private companies and other third parties can use transmission and distribution infrastructure operated by the Nepal Electricity Authority (NEA) to transmit electricity by paying prescribed fees.

ERC Chairman Dr Ram Prasad Dhital said the charges were determined under the National Electricity Transmission Grid Transmission Charge Calculation Standards.

For fiscal year 2026/27, the commission has set charges for medium- and long-term open access based on transmission capacity, while short-term users will pay 57 paisa per kilowatt hour, or unit, of electricity transmitted.

The arrangement introduces the concept of “open access,” under which private producers or consumers can use the NEA’s transmission network without owning the infrastructure. In technical terms, transmitting electricity through another entity’s network for a fee is known as wheeling.

Dhital said the mechanism was designed to allow third parties and private companies to participate in electricity transactions under an open market framework. Users will have to pay the NEA according to rates and standards set by the commission.

The ERC said the wheeling rate was calculated assuming Nepal’s maximum projected electricity load would reach 3,587 MW this fiscal year. The standards were prepared under Section 33 of the Open Access Directive for Electricity Transmission and Distribution Systems, 2025.

The commission expects the arrangement to provide non-discriminatory access to electricity infrastructure for participants involved in generation, transmission and distribution. It said transmission charges were designed to reflect costs transparently while remaining consistent with regulatory requirements.

In calculating the transmission system’s annual revenue requirement, the commission considered capital assets, depreciation, interest on long-term loans, employee costs, operation and maintenance expenses, working capital interest and return on equity.

According to the NEA’s audited financial statements for fiscal year 2024/25, the transmission system’s annual revenue requirement stood at Rs 11.015 billion. Based on an average annual increase of 27 percent in revenue requirements between fiscal years 2021/22 and 2025/26, the ERC projected the figure at Rs 17.767 billion for 2026/27 and used it to calculate the new charges.

The commission is also preparing a separate directive for determining transmission charges for radial and dedicated transmission infrastructure outside the national grid.

Nepal’s existing Electricity Act, 1992, does not clearly allow private companies to establish commercial transmission firms and independently build and operate major transmission networks. Large transmission infrastructure has so far remained under the NEA and the state-owned National Transmission Grid Company.

Private hydropower developers currently build short transmission lines from their powerhouses to the nearest NEA substations at their own expense. However, they are not legally permitted to develop major transmission corridors or national grid infrastructure to move electricity between different areas.

The new open access mechanism does not change that restriction. Instead, it allows private companies to use existing government transmission infrastructure by paying wheeling charges, opening the national grid to wider participation in electricity trading.

By Madhu Jung Pandey