Minister Shrestha Unveils 32-Point Reform Plan for Nepal's Energy and Water Sectors

Kathmandu. Minister for Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, has issued a directive featuring a comprehensive 32-point action plan aimed at structural reform, transparency, and result-oriented performance in the energy and water sectors. 

During a program held at the ministry on Thursday, Minister Shrestha instructed subordinate bodies to proceed with work under strict timelines. The directives cover multidimensional issues ranging from electricity market reforms to the strengthening of irrigation systems. The ministry has assigned clear responsibilities to relevant bodies to implement all action plans within the specified deadlines, with provisions for regular, intensive monitoring.

'This directive has been issued after extensive homework and intensive discussions with stakeholders to strengthen the water and energy sectors,' the Minister stated. 'This is not just for show; it will serve as the roadmap for our future policies, plans, and programs. Therefore, I instruct subordinate bodies and staff to complete tasks within the set deadlines and ensure continuous follow-up.'  

In the directive, the Electricity Regulatory Commission has been tasked with determining the necessary 'wheeling charges' within 30 days to implement an 'open access' system, which is expected to pave the way for competitive electricity trading between the private and public sectors. 

Additionally, a differential tariff structure based on seasonal and peak demand will be implemented for reservoir and pumped-storage projects to balance electricity production and consumption management.

The Nepal Electricity Authority has been directed to submit a report listing all pending Power Purchase Agreement (PPA) disputes along with potential solutions. The report must categorize existing PPAs into operational, delayed, and high-risk projects.

This decision is expected to boost investor confidence and assist in resolving stalled projects. To attract the private sector to reservoir projects, a policy will be introduced to extend the license period for such projects to 50 years.

The Electricity Regulatory Commission, the Electricity Generation Company, and the National Transmission Grid Company have been asked to submit reports within 30 days identifying performance issues, overlapping responsibilities, and areas for improvement.

Similarly, the Department of Electricity Development has been instructed to publish detailed information on all survey and construction licenses for hydropower projects across the country within 60 days. This will include issuance dates, progress, milestones, and compliance status. Companies failing to comply will be issued 'cure notices,' and no new licenses will be issued without a review.

A publicly accessible 'License Performance Dashboard' is planned to be established and updated monthly. 'Grid evacuation'—the infrastructure required to transmit generated electricity—has been made a mandatory prerequisite for advancing new hydropower projects.

New construction licenses will now only be issued after the Nepal Electricity Authority and the National Transmission Grid Company ensure the capacity of necessary transmission lines and substations.

Regarding financial transparency, a detailed report on the collection and distribution of hydropower royalties must be made public to ensure that the shares due to provincial and local levels are transferred correctly according to the law.

As a new dimension in the energy sector, a 'Carbon Revenue Unit' will be established to set standards for the registration, verification, and benefit-sharing of carbon trading projects, which is also expected to help reduce costs for small projects.

To increase domestic electricity consumption, the Nepal Electricity Authority and the Alternative Energy Promotion Centre will jointly prepare a national demand and consumption plan. The Nepal Power Trading Company will be fully activated to prepare a long-term electricity export roadmap.

Prioritizing new technology, a 24/7 'AI chatbot' will be arranged to resolve consumer complaints and power outage issues. Furthermore, a 'Green Hydrogen' pilot project will be advanced to encourage research and development.

Similarly, a 'Hydrological Series' will be prepared to account for changes in river flow, and the penalty system will be reviewed based on its impact on electricity production.

In water resources management, the ministry will implement river basin master plans, establish a transboundary water resources unit, develop a certified water and weather data system, and conduct groundwater monitoring programs. Groundwater management, particularly in the Terai region, will be strengthened with digital surveillance systems.

In the irrigation sector, special emphasis has been placed on completing national pride projects like Babai, Bheri-Babai Diversion, and Sikta on time. Diplomatic efforts with India will be intensified for the Mahakali Irrigation Project, and the Sunkoshi-Marin project will be moved forward through a re-tendering process.

To make irrigation systems sustainable, provisions have been made to implement 'irrigation service fees,' execute integrated agriculture-irrigation-industry plans, and prepare drought-resistant strategies for the Terai-Madhesh region.