NEA ‘unbundling’ to begin by Jan

Kathmandu, November 27:

Given the urgency with which the government is preparing to promulgate an ordinance concerning the long-awaited “unbundling” of the Nepal Electricity Authority (NEA), it appears the process will get underway by next January. Once the ordinance is activated, the actual task of “unbundling” the fully government-owned power utility agency, however, could take another two years, given the magnitude of the process. “The draft is nearly finalised. It is being further improved by the Ministry of Water Resources (MoWR) on the basis of suggestions tendered. This will be followed by a final review by legal experts,” said Dr Govind Raj Bhatta, Chairman of the Electricity Tariff Fixation Commission (ETFC). Expressing satisfaction at the way the draft is being pushed, Dr Bhatta said that “unbundling” denotes that the national grid would still be under the government control. The required set of rules and regulation concerning operations, however, will still be drawn up and enforced by the proposed Nepal Electricity Regulation Commission (NERC).

Dr Bhatta also said that reforms in the power sector could be expected to attract further investment in the energy sector while the power tariff would also come down over time. “The good news is that the chances of foreign investment may go up. The desired degree of predictability pushes up the confidence level of investors,” Dr Bhatta said. Under the provisions

of the draft ordinance, license for the survey of the project will be awarded by the Department

of Electricity Development (DED). The required go-ahead concerning actual construction, however, will have to come from the NERC.The survey license for bigger projects of international repercussion and which have an installed capacity of above 350 MW will be available from the NERC.

Also on the anvil is an amendment to the Electricity Act, 1992, to keep pace with changes in the power sector. “The desired changes in the Act will take care of the need to synchronise legal regimen betweeen Nepal and India. This is being done in the light of the future need to export power generated by the Upper Karnali and West Seti,” Dr Bhatta said. He added that the NERC would have the final say in power generation and distribution, with the government having control over the national grid.