Nepal | June 05, 2020

We will ensure a win-win situation for all concerned in tariff revision


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The government introduced the Nepal Electricity Regulatory Commission Act in 2017, which paved the way for formation of the regulatory agency in the electricity sector. The government has envisioned the commission to regulate electricity generation, transmission, distribution and cross-border power trade. The commission will regulate issues related to tariff fixing and implementation too. The commission’s decisions and directions will have to be followed mandatorily, meaning that its presence will be significant in putting an end to the irregularities reported in the energy sector. Umesh Poudel of The Himalayan Times caught up with Dilli Bahadur Singh, chairman of Nepal Electricity Regulatory Commission, to learn about the commission’s plans. Excerpts:

You were recently appointed the chairman of Nepal Electricity Regulatory Commission. What has been your experience so far?

The government unveiled its plans to regulate this sector 16 years ago. But, unfortunately establishment of the commission was delayed due to various reasons. Before I got appointed, four candidates for the top post of NERC, including myself, had made presentations about our vision and short-, medium- and long-term priorities. I suppose the government liked my presentation the best and I got the post. Currently, we are facing the crunch of manpower, finances and other resources. Still, we plan to take the commission forward as per the mandate given by the government as well as per the laws. Firstly, the government needs to facilitate us with proper infrastructure and sufficient human resources — we need at least 77 personals — to ensure smooth functioning. The government is currently holding discussions on the matter. Moreover, we recently hired a surveyor to clarify our jurisdiction as guided by the Nepal Electricity Regulatory Commission Act and guidelines. Furthermore, we recently released hydropower share allocation guidelines after holding consultations with concerned stakeholders, despite our limited resources. Thereafter some independent power producers (IPPs) have submitted their applications for pre-authentication of IPOs. However, we have not opened those files due to manpower crunch.

What other works are in the pipeline?

Now that we have released the IPO allocation guidelines, we are currently working on formulating complaint and mediation guidelines to address any issues raised by and among developers, Nepal Electricity Authority (NEA) and other concerned authorities. The NERC Act has given us the jurisdiction at par with the district court. Hence, we need better guidelines to sort out any complications in the energy sector that might arise in the future. Furthermore, we are going to make an internal work procedure, power purchase agreement (PPA) guidelines, grid code, electricity safety code and distribution code. We have already initiated the work of grid code and PPA guidelines.

IPPs have accused the commission of halting the process of PPA. What is your say on this?

After the commission was set up, we published a notice stating our location and working area. The issue related to PPA is basically just a misunderstanding. The NEA has the sole responsibility to buy and sell electricity, not to mention ink connection agreement, PPA and other things. But we have a final say before any agreement is signed, meaning that we check if the contract needs any adjustment or not. If no PPA has been signed in recent days it is because NEA has not forwarded any file related to it for our consent. Therefore, blaming us for holding up the PPA is totally wrong. We are the facilitator as well as the coordinator.

The government has given rights to the commission to introduce, modify or determine electricity tariff. Is there any plan to change the electricity tariff?

A complaint by the concerned stakeholders — electricity seller, buyers or consumers — needs to be filed before electricity tariff can be changed. At present, no stakeholder has filed any complaint at the commission for a revision in tariffs. However, we are preparing a new guideline related to electricity tariff. Since our appointment, the commission has been conducting a series of discussions with concerned stakeholders, including NEA, IPPs, alternative energy associations, and consumer associations, among others. In the meeting with NEA, they tabled strong reservations against the loss of 44 paisa per unit that the power utility is incurring right now. So, we will hold further consultations with the NEA team to find a feasible solution to this problem. We will ensure that it is a win-win situation for all concerned, including the general consumers, sellers and buyers.

There has long been a dispute between NEA and industrialists regarding payment of dedicated and truck line bill. How do you plan to find a way out?

The thing is, the industrialists have already filed a petition at the Supreme Court saying that NEA was wrong in asking them to pay the bills from fiscal 2015-16. And this was before the commission was established. Since we can’t interfere with the court’s decision, we need to wait for the decision of the apex court for further process. Nevertheless, some industrialists have not filed a case at the Supreme Court and we can look into their case if they come to us.

How do you plan to maintain the autonomy of the commission?

The NERC Act has clearly mentioned and envisioned that the commission will be an independent body. The act has also said the commission will collect fees from various sources for its sustenance. We have jurisdiction to collect fees for giving consent to initial public offering, wheeling charge, among others. If we are able to sustain ourselves, it will result in economic independence, which is crucial for independence of the commission as well.

IPPs are gearing up to establish an electricity trading company citing that the state-owned power utility had short-changed them in power trade. What do you have to say on this?

We will facilitate anyone who comes to us seeking our support to set up a power trading company, build transmission lines, and generate electricity. In fact, I think increased competition in the sector will eventually benefit consumers. I believe setting up of a new company can result in more government-to-government and business-to-business deals. While NEA is unable to bring FDI in energy sector, a company set up by the IPPs can do so, which will ultimately benefit consumers and the entire nation as well.

A version of this article appears in print on July 09, 2019 of The Himalayan Times.

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