Energy Minister Announces End to License Raj in Energy Sector

Kathmandu. Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha has announced the end of the license raj that has persisted in the energy sector for years. He stated that the tendency to not work but hold onto projects will be discouraged.

Minister Shrestha said this on Friday while addressing the 26th Annual General Meeting of the Independent Power Producers' Association, Nepal (IPPAN). He said that the tendency of obtaining licenses, not constructing projects, and keeping rivers in bags has hindered the country's energy development.

He clarified that the government will move forward by providing opportunities only to genuine investors and that the tendency of occupying projects will be controlled. 'The government will be strict towards those who obtain licenses but do not work and occupy projects under various pretexts,' said Minister Shrestha. 'We expect that this will end the license raj and create an environment for genuine entrepreneurs to work.'

Minister Shrestha also provided information about other significant steps taken by the government for the development of the energy sector. He said that the government has adopted a policy to involve the private sector not only in production but also in electricity trade and transmission line construction.

He stated that legal provisions will be made to allow the private sector to export electricity to the international market and to collect 'wheeling charges' by building transmission lines with private investment.

Minister Shrestha informed that the government has allocated a budget of Rs 70 billion this year solely for the construction of transmission lines, which are considered the backbone of electricity supply. The target is to complete more than a dozen transmission lines of strategic importance within the next one year. 

Minister Shrestha announced that the electricity purchase agreement (PPA) for projects with a capacity of less than 100 megawatts will be opened immediately, and the license period for reservoir-type projects will be extended to 50 years. 

He committed to amending the Forest Act 2076 and the Environment Protection Act 2076 to remove legal complexities in the forest and environment sectors and to make the EIA-IEE process faster and more efficient. 

He stated that the government's goal is to increase per capita electricity consumption from the current 450 kilowatt-hours to 1500 kilowatt-hours within the next 10 years. He also informed that work is being done on innovative concepts such as green hydrogen and diaspora bonds. 

Minister Shrestha urged the new leadership of IPPAN to work in collaboration with the government, stating that the broader development of the energy sector is possible only through partnership with the private sector.