April 5: The process of allowing the private sector to trade electricity has been halted due to lack of legislation. The Ministry of Law, Justice and Parliamentary Affairs has stopped the process stating that there is no such provision in the existing laws.

The Ministry of Energy, Water Resources, and Irrigation had prepared guidelines and procedures in this regard and submitted them to the Ministry of Law and Finance for approval. However, the Ministry of Law sent back the file saying that there is no legal provision to allow the private sector to trade electricity. In the meantime, the process of allowing the private sector to trade electricity was stopped immediately.

The Ministry of Law argued that any provision that is not included in the prevailing laws cannot be implemented by formulating procedures. Due to this, the process of issuing electricity trade licenses to the private sector was halted immediately, said Madhu Prasad Bhetuwal, spokesperson of the Ministry of Energy.

There is no provision in the prevailing laws to allow the private sector to trade electricity. However, the private sector has been seeking permission for the electricity trade. The Independent Power Producers Association of Nepal (IPPAN) has set up a company called Nepal Power Exchange Limited to trade electricity. The company has also signed an agreement with Indian electricity trading company Manikaran to provide 500 MW of electricity by next year.

Given these issues, the Ministry of Energy had prepared a procedure to allow the private sector to trade electricity. However, after the Ministry of Law imposed the ban, the issue has become complicated.

Meanwhile, Energy Minister Pampha Bhusal said that the private sector would be allowed to trade electricity even through an ordinance. She said this while addressing the Himalayan Hydro Expo held in Kathmandu on Monday.

The Electricity Act under consideration in the parliament has a provision to allow the private sector to trade electricity. However, due to the obstruction of parliament, it is not likely to be passed immediately.

Minister Bhusal said that if an ordinance is introduced, the private sector will be given a license to trade electricity.

"We are in favor of allowing the private sector to trade electricity. However, due to the lack of legislation, there were some immediate problems,” she said.

“Therefore, if we bring an ordinance, we will give the license,” she assured.

Chairman of IPPAN, Krishna Prasad Acharya, said that there was no need to think about this issue. "The issue raised by the energy minister is serious. But for us, the license is more important than that,” he added. "

At present, Nepal Electricity Authority (NEA) has stopped 215 river flow projects of 9000 MW capacity.  Energy producers of the private sector say that the PPA of those projects can be done if they get a license from the government.