The Energy Ministry has been preparing to establish three separate companies for electricity generation, transmission and trade as the first step in its move to unbundle the Nepal Electricity Authority (NEA).

Although there has been much talk about taking the NEA apart, ministry officials are moving slowly as they fear that it might lead to further chaos. They said that separate companies would be formed for generation, transmission and trade which would operate parallelly with the NEA.

The Energy Ministry has set up Grid Development Company for the development of transmission lines under the full ownership of the

government.

“The company has already been established and we are about to form its board of directors,” said Poshan Chandra Subedi, joint secretary of the Energy Ministry. “Once the board is formed and the company is formally incorporated, it will start erecting new transmission lines throughout the country.”

Similarly, the ministry has moved to establish Electricity Generation Company which will focus on electricity generation. “The Cabinet has already approved it,” said Subedi. “After its incorporation, it will look after new projects to generate electricity.” The ministry has been working to set up Electricity Trading Company which will procure and sell electricity within and outside the country. As there may be cross-border power trade, the ministry wants to establish the company as a strategic partnership with a foreign company.

“The trading company might have to import electricity when there is a deficit and export it when there is a surplus,” said Subedi. “So we are planning to form a trading company with a strategic partner.”

If there are no hitches, the three companies should be up and running within six months, according to Subedi. The ministry plans to transfer the NEA’s human resources to these companies gradually and eventually complete the unbundling within five years.    

However, the existing NEA Act must be amended before these three companies can start operations. As per this act, only the NEA is allowed to generate, transmit and trade electricity. The law will be amended within a couple of months, ministry sources said.