A bill to amend the Electricity Act-1992 to allow the Nepali private sector to trade in electricity has been passed by the National Assembly after two years of its tabling, but its passage by the lower house remains uncertain, leaving the private sector dejected.

The bill to Amend and Integrate Existing Electricity Laws has provisions to provide licence to the private sector to trade in electricity within and outside the country. Until now only the state-owned Nepal Electricity Authority can engage in power trade.

With the elections announced for November 20, lawmakers say Parliament is likely to function for a little over two months and this would be enough to pass the bill into law. But there are concerns whether the House should pass any bill since the government has been rendered a mere caretaker following the announcement of elections.

“There is no certainty as to how long the current Parliament will function,” Energy Minister Pampha Bhusal said at an interaction organised by the Society of Economic Journalists, last month. “I am in favour of taking the bill to the House of Representatives but only if its passage is certain. Otherwise, we will have to begin the process from the beginning.”

She said she has been in consultation with lawmakers and stakeholders to ascertain whether it would be appropriate to table the bill in the lower house or not.

“My efforts will also be towards amending the Electricity Act-1992 to add ‘trading’ alongside the existing ‘production’ and ‘distribution’ provisions to allow the private sector to engage in power trade after the current parliament session ends,” she said, clearly indicating the possibility of her intention to amend the Act through an ordinance.

During her meeting with representatives of Independent Power Producers of Nepal (IPPAN) on Friday, she was not hopeful of the current Parliament passing the bill.

“The minister said she was making efforts to pass the bill but will not be taking a risk to take the bill to the lower house unless she receives assurances of its passage,” said IPPAN Vice-president Mohan Kumar Dangi, who participated in the meeting with the minister.

Rajendra Phuyal, secretary of the National Assembly, agrees with Bhusal. “There is no point in tabling the bill at the House of Representatives if its passage is uncertain. “As far as I understand, the bill is less likely to be tabled in the lower house now,” he said.

The current Sher Bahadur Deuba-led government turned into a caretaker one after the declaration of elections last week.

“Although the code of conduct for elections is yet to be enforced by the Election Commission, whether the current government can take the amendment bill to parliament is still debatable,” said Ashish Garg, vice-president of IPPAN, adding, “We are therefore not hopeful of this bill. We may have to wait until a new Parliament is elected.”

The private sector has long been pushing for the government’s approval to engage in power trading, including to export power to India.

The private sector first established a trading company—Nepal Power Exchange Limited—in 2019 with the involvement of several companies associated with IPPAN.

Since India allowed Nepal to sell electricity in the Indian market through the Indian Energy Exchange, an electronic trading platform of power, in November last year, the private sector in Nepal has also shown greater interest to export power to India.

Nepal Power Exchange Limited and India’s Manikaran Power Limited signed a memorandum of understanding (MoU) on energy trading on January 10 this year.

In the past year, more private sector players have shown interest to engage in power trade including the one promoted by the Nepal Infrastructure Development Bank. The Power Trading Company Limited, a subsidiary of the NEA, received the government’s permission for cross-border trading of electricity last December. The Company received a trading licence through a cabinet decision.

Power Trading Company Limited is the first private sector company to receive power trading approval. The state-owned NEA is involved in power trade as per section (20) of the Nepal Electricity Authority Act-1984.

Although the private sector has long been demanding, the government had been ignoring the call citing a lack of law.

The Electricity Act 1992 does not allow the private sector to engage in power trade. The Ministry of Energy, Water Resources and Irrigation had earlier held inter-ministerial consultations on a draft electricity transmission directive and a set of guidelines to allow the private sector to engage in trading—domestic trading, export and import—of electricity.

But the Ministry of Law, Justice and Parliamentary Affairs discouraged the plan, arguing that the existing law does not have any provision to allow the private sector to trade in electricity.

Then, the energy ministry drafted an amendment to the Electricity Act-1992 through ‘Some Nepal Act Amendment Bill.’

“Had the government pushed hard to convince the lawmakers to pass the bill, it would already have become law opening the door for the private sector to engage in power trading,” said Garg, the vice-president of IPPAN.