Nepal Power Exchange Limited's (NPEL) plan to sell 500 MW of electricity to India is in doubt after the government delayed the process of issuing licenses for power trade. NPEL had reached a bilateral agreement at the Power Summit held in Kathmandu last December to provide 500 MW of electricity to Manikaran Power Limited of India this rainy season. However, the government's refusal to grant permission to NPEL for electricity trade has cast doubt over the implementation of the agreement.

Currently, the government-owned Nepal Electricity Authority (NEA) has been solely conducting electricity trade. There is no provision in the prevailing laws for the private sector to trade electricity. It may be noted that NPEL had entered into an agreement with Manikaran Power Limited after the government promised to give license to the private sector to trade electricity.

However, the government has now stopped the process of issuing licenses to the private sector citing lack of law.

Energy Minister Pampha Bhusal had pledged to allow private sector to trade electricity even if the government had to issue an ordinance for it.

Ashish Garg, managing director of NPEL, confirmed that the issue of providing 500 MW of electricity to Manikaran Power Limiter has become uncertain due to lack of license.

"If the government had given the license, we would have taken further steps to export electricity to India through Manikaran,” said Garg. He is in a dilemma as the government has not issued a license. The government needs to pay attention to this matter, he further said.

In fact, NPEL does not have its own electricity to sell. During the rainy season, NEA generates about 1000 MW more electricity. During this time the NEA sells 364 MW electricity in India’s open market and 200 MW to trading companies there. Taking this into consideration, NPEL had planned to buy the surplus electricity from NEA and sell it to Manikaran Power Limited. NPEL has stated that it has not been able to take any further action due to lack of license.

Meanwhile, spokesperson of the Ministry of Energy Madhu Prasad Bhetwal says that they are looking for alternative ways to give electricity trade licenses to the private sector.

"Licensing electricity to the private sector has not been possible without the necessary legislation, so we are looking for alternatives. We are ready to resolve this problem as soon as possible,” he said.

Previously, the ministry had formulated a procedure to give licenses to the private sector for electricity trade. However, the Ministry of Law had banned the private sector from trading electricity stating that the existing Electricity Act does not have any such provision. The electricity bill under consideration in the parliament has a provision for the private sector to trade electricity.