Govt Falls Short on Energy Sector Reform: CNI

KATHMANDU; The government made limited progress in implementing its energy-sector reform agenda outlined in the annual budget for FY 2025/26, despite advancing some policy and strategic preparations, according to the Confederation of Nepalese Industries (CNI).

CNI’s Budget Watch, a flagship publication, highlights slow implementation of several key energy programs announced in the budget.

The government had pledged to complete the long-delayed restructuring of the Nepal Electricity Authority (NEA), including its division into separate entities for generation, transmission, distribution and power trading. However, the restructuring remained incomplete.

The budget also proposed revoking licenses of projects that had secured power purchase agreements (PPAs) but failed to begin construction, while introducing new PPAs under a ‘take-or-pay’ mechanism. It had also promised immediate PPAs for projects below 10 MW and a mechanism to determine electricity purchase rates during the dry season.

To support these reforms, the government planned to introduce a new electricity bill in coordination with the private sector, amend existing laws and simplify procedures for smaller hydropower projects.

Similarly, the government had announced legal arrangements to allow the private sector to trade electricity in international markets, construct transmission lines and charge wheeling fees. Amendments to the Electricity Act and a framework for wheeling-charge calculation by the Electricity Regulatory Commission were also planned.

However, CNI said the government failed to fully enact the required laws and faced multiple implementation hurdles. Despite ambitious policy commitments, progress in putting energy-sector reforms into practice remained weak, the report said.