New Government Prioritizes Energy Export

Amid growing imbalances in electricity generation and distribution, the government led by the Rastriya Swatantra Party (RSP) has announced its plan to formulate an energy export strategy to address these issues. In its 100-point governance reform agenda made public on Saturday, the government stated its commitment to developing the energy sector as a key foundation for economic transformation and said the export strategy would be introduced within a month.

Electricity generated from hydropower projects promoted by private energy producers has been increasingly connected to the national transmission line of late. However, due to the lack of transmission infrastructure, a significant rise in overall domestic demand, and an oversupply of electricity in the transmission system during the monsoon season, some projects are being forced to curtail power or operate below capacity. Private energy producers have therefore been urging the government to prioritize electricity exports. Implementation of the government’s energy export strategy could largely address the private sector’s concerns.

The government has stated it will promptly implement a strategy focused on exporting electricity to markets where higher prices can be secured. The aim is to achieve greater revenue particularly by selling electricity during peak evening hours.

Ministry of Energy officials have not provided detailed information on what the strategy will encompass. Given that Nepal’s electricity exports have historically been to India, the new strategy is expected to be India-focused.

In fiscal year 2021/22, Nepal exported electricity worth Rs 17.45 billion to India and Bangladesh. In the last fiscal year, Nepal received permission to export 1,136 megawatts of electricity to India.

The Independent Power Producers' Association, Nepal (IPPAN) has welcomed the government’s decision to finalize the energy export strategy within a month. According to IPPAN Chairman Ganesh Karki, this could increase private sector participation in electricity trade and transmission line construction. Karki also stated that going forward, the private sector should be involved in transmission, distribution, and export alongside generation. For the successful implementation of the export strategy, Karki emphasized the need to expedite the construction of both cross-border and domestic transmission lines.

Sagar Shrestha, Chief Executive Officer of the National Grid Transmission Company Limited, noted that achieving energy export targets would be difficult without adequate development of cross-border transmission lines. Highlighting that the 400 kV Dhalkebar–Muzaffarpur transmission line is currently the main route for exporting electricity to India, Shrestha said additional cross-border lines are essential. He added that a significant expansion in export capacity will only occur once new 400 kV lines currently at various stages of construction are completed. Cross-border transmission lines under construction include the New Butwal–New Gorakhpur 400 kV line, the Inaruwa–Purnia line, and the New Lamki–Dododhara–Bareli 400 kV line.

Shrestha noted that private sector’s interest and investment in power generation remain strong, so generation capacity is not expected to be a problem. "If the generation side is kept open and the market is ensured, projects will move forward quickly," he said. "However, this requires a separate, capable regulatory body."

Shrestha emphasized the need for corridor-based planning alongside transmission infrastructure expansion, strengthening the national grid, and a clear roadmap with a long-term goal of exporting electricity to Bangladesh.

Hiraman Waiba, Chief Executive Officer of the Electricity Generation Company Limited, said many projects with completed feasibility studies and detailed project reports are ready to move to the construction phase. Ensuring investment in these projects and implementing them quickly would help meet the government's targets.

He identified transmission lines, particularly the infrastructure connecting project sites to the main grid and cross-border lines, as a major challenge. "Not only cross-border transmission lines, but also the domestic lines that connect to them are equally important," Waiba said.

All Pending PPAs to be Resolved Within 180 Days

The government has announced that all pending power purchase agreements (PPAs) and decisions related to project permits will be finalized within a maximum of 180 days. These long-stalled decisions have been affecting investment and project implementation in the energy sector. By setting a deadline, the government aims to expedite the process.