Balen Shah, mayor of Kathmandu, and Rabi Lamichhane, newly elected Member of Parliament from Chitwan-2, did not cast their votes for the Provincial Assemblies.

Both of them oppose the structure of the provinces in Nepal’s federal set-up. Lamichhane indicated he was not for scrapping the provinces, he just wanted certain reforms. Shah, who has been bulldozing illegal structures around Kathmandu, perhaps would like to drive a bulldozer over the part about provinces in the constitution.

Exactly why or what they oppose or wish to reform is not clear. Both have won convincing victories, and are widely regarded as agents of change and symbols of hope. Their voice, or in this case, their symbolic protest by refusing to vote, matters deeply.

But this is no time to doubt the relevance of the provinces. If utilised as the constitution intended, the provinces could be the most important component driving the systemic changes that Shah and Lamichhane are seeking to lead.

Lame arguments

I draw upon a story from the energy sector to illustrate how the provinces could sustain positive long-term changes and invite the mayor and the MP to reconsider their opposition.

This June, the provinces announced an annual budget of Rs305 billion, a 17 percent increase over last year. Approximately 15,000 staffers currently work in the provincial governments. Most of the key organisations and institutional arrangements have been established. But the provincial governments have yet to become truly meaningful.

It is also important that change agents like Shah and Lamichhane not fall for lame arguments. One such claim is that this system is too expensive administratively for Nepal’s size and economy. This argument is fallacious. By this reasoning, a dictatorship would be the most cost efficient system. But I’m sure that is not the vision that Shah and Lamichhane are promoting.

The federal government is yet to pass any legislation that empowers the provinces in the energy or environment sector. The Environment Protection Act 2019, for instance, provides some authority to the provinces and local governments; but contains ambiguities like an unfunded mandate to undertake unspecified activities.

Assessing the failures of the provincial governments without recognising the fact that the federal government is dictating the terms is a bit like choking someone and wondering why he is not breathing.

In the evolving landscape of Nepal’s federal structure, the provinces could play a critical role in driving positive change. To see how, consider this. In September 2022, the Ministry of Energy, Water Resources and Irrigation withdrew an amendment to the Electricity Act-1992 that had been placed for consideration before Parliament.

The amendment attempted to introduce a wide range of reforms: Improve the corporate structure of the Nepal Electricity Authority; reduce licence requirements; open access in transmission; unbundle the utility into generation, distribution and transmission; retail electricity competition; and integrate renewable energy.

These reforms are widely needed. But sensing a lack of broad-based political support, the ministry withdrew the proposed amendment from Parliament.

This attempt to reform the Electricity Act may have failed for many reasons. One may be that there wasn’t enough support for these amendments. Since the Nepal Electricity Authority is now a profitable institution, electricity supply is abundant and new generating capacity is in the pipeline, the urgency for reform may have appeared weak.

But this doesn’t mean the underlying basis for reforms proposed in the amendment isn’t necessary. On the contrary, they are critical to the long-term growth and continued success of Nepal’s electricity sector. But who will be the champion of these reforms? This is where the provinces have a special role to play as champions of reform and advocates for change.

The provinces must be able to invoke the authority granted to them under the constitution. Schedule 9 lists electricity services, along with water supply and irrigation, under the “List of Concurrent Powers of Federation, State and Local Level”. Despite this authority, there is no real effort to understand or assess what that authority means, and more importantly, how it could be institutionalised.

One way to move forward could be to establish a vision for the electricity sector. Besides unbundling the power utility, its ownership could be devolved into the provinces.

Some provinces may then choose to privatise their power utilities. Some may decide to involve private sector players. Some may choose to open distribution to retail competition where customers can choose their own suppliers, enable open access and introduce other models for competition. All of this will require a strong regulatory foundation, akin to the amendments of the Electricity Act. If Nepal’s constitution allowed the provincial governments to pick their names and capitals, surely, they could be allowed to choose their own future on electricity.

Champions of reform

Nepal’s constitution grants the provinces and local governments the authority and responsibility over the electricity sector. By staking claim to that authority, they could provide what the electricity sector currently lacks: champions of reform.

Reform-minded, forward-looking emerging leaders such as Shah and Lamichhane, who embody the hope of many Nepalis, must also recognise this opportunity for system-wide reform. They must translate these opportunities into credible mass movements for reform instead of becoming just another cult of personality.

The devolution of power from the centre to the provinces and local governments, and ultimately the people of Nepal, is the core philosophy of the constitution. In the energy sector, the provinces have the power to champion and bring about reform that has eluded it for decades. Prominent leaders, like the mayor of Kathmandu and the parliamentarian from Chitwan, must explore ways to mobilise the provinces to deliver what Nepal’s constitution truly intended for the Nepali people.