KATHMANDU, July 23: The government has allowed the Nepal Electricity Authority (NEA) to carry out the entire procedure to export electricity with India and Bangladesh.
According to the Ministry of Communications and Information Technology, the cabinet meeting on Monday has given prior approval to delegate the state-owned power utility authority to look after entire procedures to sell and purchase electricity to and from these countries. After the government approval, the NEA is now the focal authority to call for bidding or to conduct day-ahead and/or term-ahead for energy trading.
The day-ahead energy market refers to a financial market where market participants purchase and sell electric energy at the prices fixed a day before for the following day. According to the NEA, it has planned to sell and purchase electricity in 96 blocks, each of the blocks allowing energy trading for as minimum as 15 minutes.
Similarly, the term-ahead energy market provides a range of products allowing participants to buy/sell electricity on a term basis for the specified duration for which the prices are fixed a few days in advance.
Likewise, the NEA has also been given permission to make decisions on short-term, medium-term and long-term trading of energy with the two neighboring countries. With the provision coming into effect, the NEA is responsible to maintain all the details of the transactions at various stages of electricity trading.
The government decision comes at a time Nepal is looking forward to selling the surplus electricity during the flush season. Similarly, the move also allows the NEA to take decisions on its own to purchase electricity during the shortfall in domestic production.
Currently, the country’s electricity production stands at 1,300 MW. The energy demand during peak hour reaches to 1,200 MW, while the consumption in the off-peak hour falls to around 900 MW or even below. Similarly, the NEA has started investing in electricity production and the improvement of related infrastructures, including transmission lines and substations.
Likewise, additional 1,300 MW of electricity produced by both the private sectors and the NEA is in the pipeline to be connected in the national grid from the next fiscal year, according to the annual budget 2020/21. In this regard, the NEA has been seeking the government’s nod for selling electricity to India and Bangladesh.
Earlier, the Bangladeshi government had announced to buy more than 9,000 megawatts of electricity from Nepal by 2040. A plan to start energy trading with Bangladesh has remained on hold after a failure to hold a tripartite meeting on energy cooperation among Nepal, Bangladesh and India. Although the tripartite meeting was scheduled for last September, it could not take place as Indian side did not respond to the meeting.
As per the initial agreement made by the three countries, the Indian External Affairs Ministry was assigned the responsibility of calling the meeting as soon as possible. But the Indian ministry is yet to coordinate with Nepal and Bangladesh.