- Nepal’s Electricity Regulatory Commission has set national transmission grid charges, fixing medium-term access at Rs 412,755 per megawatt per month.
- The move implements an open-access system, allowing eligible third parties to use the national grid for domestic electricity trading and potential exports.
- Private producers welcome the decision but worry the 57-paisa short-term charge may reduce the competitiveness of Nepali electricity in export markets.
- This regulatory step supports Nepal's goal of 28,500 MW capacity by 2035, emphasizing infrastructure needs for distributing surplus power.
Kathmandu: Nepal has spent years increasing its electricity generation. But producing power is only part of the job. The electricity also has to reach industries and consumers, and surplus power has to be moved to the border when it is available for export.
That makes the country's transmission network increasingly important.
The Electricity Regulatory Commission (ERC) has now fixed the charge for using the national transmission grid, giving eligible electricity producers, traders and consumers a clear cost for accessing the network.
For fiscal year 2083/84, the charge for medium- and long-term open access has been fixed at Rs 412,755 per megawatt per month. For short-term open access, the charge is 57 paisa per kilowatt-hour.
The decision is part of Nepal's move toward an open-access electricity system. It allows eligible third parties to use the Nepal Electricity Authority's (NEA) transmission network by paying the prescribed charge and meeting the relevant conditions.
It does not, however, mean that every private power producer can freely sell electricity to any customer or export power without further approvals. Electricity trading still depends on available grid capacity, contracts, licensing and technical and regulatory requirements.
How the charge was set
The ERC issued the National Electricity Transmission Grid Transmission Charge Calculation Standards, 2083 under the Directive on Open Access to Electricity Transmission and Distribution Systems, 2082. The standards came into effect from Bhadra 31.
The commission calculated the charge on the basis of the transmission system's annual revenue requirement and projected electricity demand.
The calculation includes depreciation of transmission assets, interest on long-term debt, employee and operating expenses, transmission-service costs, interest on working capital and return on equity, among other costs.
According to the ERC, the transmission system's annual revenue requirement was Rs 11.015 billion in fiscal year 2081/82, based on information provided by the NEA and its audited financial statements. The requirement for fiscal year 2083/84 has been projected at Rs 17.767 billion, based on an average annual increase of 27 percent in the transmission system's revenue requirement over the preceding years.
The calculation uses a projected maximum system load of 3,587 MW for 2083/84.
The charge is intended to allow the cost of operating and maintaining the transmission system to be recovered from those using the network.
Private sector welcomes the decision, questions the cost
Private electricity producers have welcomed the decision because it provides a clearer basis for using the national transmission system.
Uttam Bhlon Lama, senior vice-president of the Independent Power Producers' Association, Nepal (IPPAN), said private developers had been waiting for a mechanism that would allow them to use the grid for electricity trading.
But he has also questioned the cost.
Lama said the 57-paisa-per-unit charge could add to the cost of electricity traded through the national grid. For electricity destined for India, the domestic wheeling charge would be only one part of the total cost, with cross-border transmission and other charges also coming into play.
He has argued that the charge should be reviewed if it makes Nepali electricity less competitive in regional markets.
Former IPPAN president Ganesh Karki has also welcomed the decision, saying private developers had been seeking a clear mechanism for electricity trading.
For private companies, however, the wheeling charge is only one part of the cost of a transaction. Depending on the arrangement, users may also have to pay system-operation, scheduling, metering, settlement, deviation and other applicable charges.
More power, greater need for transmission
Nepal's electricity sector is now entering a different phase.
For years, the main concern was whether the country could generate enough electricity. As generation increases, the ability to move that electricity is becoming equally important.
Nepal's energy plans envisage 28,500 MW of installed generation capacity by 2035, including 13,500 MW for domestic consumption and 15,000 MW for export.
Meeting those targets will require investment not only in hydropower projects but also in transmission lines and substations.
Some hydropower developers have already faced problems in evacuating electricity because of limited transmission capacity. The new wheeling-charge system provides a price for using the network, but it does not create additional transmission capacity.
That will still require new lines, substations and upgrades to the existing system.
The transmission network also faces physical risks. Floods and landslides have damaged hydropower and transmission infrastructure in recent years, adding to construction, repair and maintenance costs.
What about electricity exports?
The new arrangement could make it easier to structure electricity transactions through Nepal's national grid, but it does not by itself open the door to unrestricted private electricity exports.
Electricity traded across the border has to meet the requirements of the countries involved.
Nepal already sells electricity to India under approved trading arrangements, while its electricity trade with Bangladesh also depends on arrangements involving Nepal, India and Bangladesh.
For exporters, the cost of moving electricity through Nepal's grid will therefore have to be considered along with the costs and conditions associated with cross-border transmission and market access.
More rules are still coming
The ERC said it is preparing a separate directive for determining transmission charges for radial and dedicated transmission facilities outside the National Electricity Transmission Grid.
This means the Rs 412,755 rate does not apply to every transmission facility in the country. It is the charge fixed for the national transmission grid under the open-access framework.
The ERC can also review transmission charges as costs, demand and the use of the network change.
For now, the main change is that eligible users have a defined price for access to the national grid.
Whether the arrangement leads to more private electricity trading will depend on what happens in practice: whether enough transmission capacity is available, whether the total cost is acceptable to users and whether generators, traders and consumers can make effective use of the open-access system.
For Nepal, the challenge is no longer only about generating more electricity. It is also about building enough transmission capacity and creating workable rules to move that electricity to where it is needed.
