The Energy Ministry’s plan to establish Nepal Electricity Regulatory Commission (NERC), a powerful body to regulate the country’s energy sector has been delayed after the Law Ministry failed to provide consent over a regulation required to operate such commission. The Energy Ministry had sent the draft of Electricity Regulatory Commission Regulation to the Law Ministry around two months ago but has yet to receive consent from the latter.

As a result there has been a delay in establishing a very important body to regulate the energy sector of Nepal. The ministry was planning to begin the process of establishing the NERC’s secretariat and hiring staff including the chairman and members from April. “But without the regulation, we are not in a position to initiate the process,” said Dinesh Kumar Ghimire, joint secretary at the Energy Ministry. “We are planning to follow up with the Law Ministry in the coming week and urge them to give quick consent.”

 According to Ghimre, once the Law Ministry provides consent over the draft regulation, the Energy Ministry will immediately take it to the Cabinet for approval. “Then we will start the process to establish the commission,” he said.  

Although the plan to form the NERC was floated a decade ago, Parliament only endorsed the Electricity Regulatory Commission Act in August 2017, paving the way for its establishment. The bill was then signed into law in 91 days after President Bidya Devi Bhandari signed it as provisioned in the bill.

However, the ministry delayed the process of establishing the commission as the formation of a new government was in the offing and senior officials of the Energy Ministry were not planning to bring the commission into operation before the new government was formed. According to reliable sources at the ministry, Energy Minister Barsha Man Pun is pressing ministry officials to expedite the process.

The NERC will supersede the existing Electricity Tariff Fixation Commission and set the charges that customers will have to pay to Nepal Electricity Authority (NEA), the state-owned power utility. The commission will fix the electricity tariff after holding a public hearing.

The commission, according to the regulation, will also establish a code that various entities under its jurisdiction will have to follow. The code will specify standards for the construction of hydropower plants, transmission lines and distribution networks. It will also determine the voltage that will be supplied to customers by the utility. The commission even will have a full mandate to determine the power purchase rate for the state-owned power utility. At present, NEA is the sole buyer of electricity in Nepal and it has been fixing the rate for purchase of electricity from hydropower project developers.