Nepal opens door for state-backed power trader, while private firms remain shut out

Nepal's state-owned electricity trading company is poised to enter the business of buying and selling power, a move that has drawn criticism from private sector firms. The Nepal Electricity Authority's board has approved its subsidiary, Nepal Power Trading Company Ltd (NPTCL), to trade up to 100 megawatts of electricity.

NPTCL will deal in electricity generated by projects that already have power purchase agreements with the Nepal Electricity Authority. The company plans to sell this power to India and possibly other nations. The proposal awaits consent from the Electricity Regulatory Commission before NPTCL can begin operations.

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We have sought the commission’s consent to buy and sell electricity. Once we receive its approval, we will look for a market to sell the electricity.

Nepal exported electricity worth approximately $22 million USD in the last fiscal year, while importing about $7.7 million USD from India during the dry season. The Nepal Electricity Authority currently manages both import and export activities. The government has designated the authority as the nodal agency for cross-border electricity trade since 2020.

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The NEA board has already approved the arrangement and the proposal has now been sent to the Electricity Regulatory Commission for its consent.

Despite being established in 2016, NPTCL has remained largely inactive. The Cabinet authorized it to operate in December 2021, but it has yet to commence trading. The recent approval from the NEA board includes price and margin restrictions, setting a floor price of 5.45 Indian rupees per unit and a trading margin cap of 10 paise per unit.

This selective market opening has reignited complaints from private power companies, who argue that the government favors state-backed entities.

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The NEA has now approved NPTCL to sell 100 MW of electricity.