Nepal's Electricity Regulatory Commission to Introduce Corporate Governance Standards for Licensed Entities

Kathmandu. The Electricity Regulatory Commission is set to introduce the 'Standards Related to Corporate Governance of Licensed Entities, 2082'. The Commission has prepared these standards using the authority granted by Section 43 of the Electricity Regulatory Commission Act, 2074.

The publicly disclosed draft mandates that licensed entities must prepare and implement regulations by following the fundamental principles and arrangements related to public procurement to make the procurement process transparent and competitive. Furthermore, it seeks to establish a provision where licensed entities are prohibited from participating in construction consultation or similar supply works for companies, firms, or joint venture companies or entities that have a direct or indirect stake in projects they construct or operate.

It is mentioned that a company where the promoter and the construction company are the same entity shall not be allowed to undertake construction. The draft of the new corporate governance standards aims to systematize, make transparent, and ensure accountability in the operations of electricity sector license holders.

The draft, prepared in accordance with the legal provisions concerning electricity regulation, covers aspects ranging from company operations, board structure, accounting systems, risk management, to human resource administration.

The draft proposes that every licensed entity must promote and adhere to good corporate governance practices, be accountable to shareholders and stakeholders, and maintain transparency in financial and administrative activities.

Provisions have been included to ensure female representation on the board of directors, allow for independent directors, and mandate that directors must recuse themselves from decision-making processes concerning matters where they have a private interest.

In terms of accounting and financial management, the draft incorporates mandatory double-entry accounting systems, internal and final audits, and the implementation of an effective internal control system. Standards related to risk identification, risk measurement, insurance arrangements, and workplace safety are also proposed.

Human resource management requires the implementation of employee regulations to systematize staff appointment, promotion, and benefits, and the preparation of procurement regulations to ensure transparency in the procurement process. Provisions for corporate social responsibility, a grievance redressal mechanism, disclosure of financial statements, and the ability of the regulatory body to conduct necessary investigations and inspections are also proposed.

The draft mandates the identification, measurement, and maintenance of a register for risks associated with project construction and operation. It states that insurance arrangements should be made as necessary based on the probability of the risk. The proposal suggests classifying risks into 'Certain', 'High', 'Medium', 'Low', and 'Very Low'. -News Agency Nepal