KATHMANDU, Oct 28: The government has issued letters of intent to private companies to prepare for cross-border electricity trade, paving the way for firms active in power generation to explore trading opportunities and expand their markets.
Under a decision by the Ministry of Energy, Water Resources and Irrigation, companies that have received the letters of intent can study domestic and foreign markets, identify potential buyers and trading partners, and assess the technical and financial feasibility of electricity trade.
As Nepal expands its hydropower generation capacity, the initiative aims to find new markets for surplus electricity and create more opportunities for private investment. The arrangement is expected to allow Nepali companies to expand their role beyond power generation to include electricity trading and market development.
Government opens door for private sector in cross-border electr...
The private sector has made a significant contribution to Nepal's energy sector. Involving private companies in preparations for cross-border electricity trade could help identify new opportunities for regional energy cooperation, power transactions and investment.
Letters of Intent do not authorize electricity sales
The letters of intent issued by the government do not constitute final approval to operate electricity trading businesses. Companies that have received the letters cannot immediately buy or sell electricity. Before starting trade, they must obtain the required licences under existing laws, secure approval from the relevant authorities and complete procedures for access to the transmission system.
The government's move is expected to help Nepal's electricity sector expand beyond power generation into market development and regional trade. Its actual impact will depend on how far the companies advance their trading activities after obtaining the necessary approvals.
