The government has approved the Open Access Directive 2025, effectively ending the Nepal Electricity Authority’s (NEA) monopoly on electricity trade and allowing private hydropower producers to sell power directly to consumers. The directive was endorsed by the Electricity Regulatory Commission (ERC) on January 9.
Under the new provision, private producers will have equal access to electricity transmission and distribution networks for the power they generate. Captive power plants with a minimum capacity of 1 MW and contract energy projects of 5 MW or more connected to 33 kV lines can directly supply electricity to domestic industrial and commercial users. For cross-border trade, private producers must export at least 10 MW.
Despite the liberalisation, power sales will remain regulated. The NEA’s System Operation Department has been designated as the nodal agency to receive applications, assess plant capacity, and issue licences for open access transactions. Buyers using the system will be required to pay various charges, including transmission and wheeling fees, deviation settlement, cross-subsidy surcharges, standby service fees, and other operational costs.
The move is part of the government’s broader effort to promote private sector participation in the power sector. It follows a public-private partnership agreement signed last December to jointly develop transmission infrastructure. With Nepal aiming to generate 28,500 MW of electricity by 2035 and expand exports to India and Bangladesh, the government has acknowledged that private investment is crucial to meeting growing generation and transmission needs.
