Nepal opens its grid to private power traders, at a price they call too high

Until October 2026, anyone in Nepal who generated electricity had one customer: the state-owned Nepal Electricity Authority (NEA). The NEA bought the power, carried it across its transmission grid and sold it, at home or across the border. On 1 October the Electricity Regulatory Commission (ERC) published the charge that private companies must pay to use that grid themselves. In principle, the monopoly is over.

The numbers

The ERC set two prices for fiscal year 2026/27. Users who book capacity on a medium- or long-term basis will pay Rs 413,000 (about $2,660) per megawatt per month. Short-term users will pay 57 paisa (about 0.37 US cents) per kilowatt-hour carried. The commission's chairperson, Ram Prasad Dhital, said the rates were calculated under a new transmission charge standard that took effect on 17 September, using the NEA's audited accounts for 2024/25 and its estimated revenue needs for the following two years.

The charge applies to independent power producers, licensed traders and large industrial buyers who want to strike their own deals. A framework approved by the ERC in June 2025 set the basic rules: a minimum transaction of 5 MW for domestic trades and 10 MW for cross-border ones, and the NEA's system operations department as the nodal agency.

A fight over 37 paisa

The NEA had asked for Rs 1.35 a unit. Jaya Raj Bhandari, an ERC member, told Clickmandu that the final figure was a substantial cut on that demand and reflected only operating and asset costs.

Generators are not satisfied. The Independent Power Producers' Association, Nepal (IPPAN) welcomed the existence of a standard but has called for a review. Its senior vice-president argued that if transmission assets were depreciated over realistic lifespans of 50 to 100 years, a fair charge would be 20 to 25 paisa. IPPAN's secretary, Suman Joshi, warned that the rate makes commercial trading uneconomic. At least one developer, Mohan Karki, took a milder view, describing the policy as a starting point that can be refined.

The arithmetic explains the irritation. Traders hoping to sell domestically are aiming for prices of around Rs 6 to Rs 6.50 a unit. For exports the charges stack up: 57 paisa on the Nepali grid, a cross-border fee of 15 to 20 paisa, and India's inter-state transmission charge of about 88 Nepali paisa. Clickmandu puts the total at around Rs 1.50 a unit before a single kilowatt-hour is sold, although the components it lists add up to Rs 1.60 or more.

India is the bigger obstacle

Price is not the only barrier. India's guidelines on cross-border electricity trade recognise the NEA as the only authorised seller from Nepal. Until India changes its own rules, a Nepali private company has no legal standing to sell power into the Indian market or through it to Bangladesh.

Anshu Kiran Shahi, an NEA board member, told Clickmandu that Nepali private firms cannot sell to India or third countries unless Indian regulations formally recognise them, and that the legal and technical groundwork could take one to two years.

Interest is nonetheless building. Eleven companies have applied to the Department of Electricity Development for letters of intent to trade power, with no cap on applications. A letter of intent, however, guarantees neither export rights, transmission capacity nor cross-border clearance.

What changes now

The immediate effect is likely to be domestic. A hydropower producer can now, in theory, sell directly to an industrial park or a cement plant, paying the NEA only for the use of its wires. That matters for an industry that has complained for years about delayed payments and curtailment by a single buyer.

The larger prize, private exports to India and Bangladesh, depends on decisions in New Delhi. That makes the wheeling charge a necessary step rather than a sufficient one. Nepal has written the rules for an open power market. Whether a market forms depends on a neighbour's regulator and on whether 57 paisa leaves room for a margin.