Electricity Reforms and Electricity Reforms and Regulations Regulations

in in NepalNepal

Navin DahalNavin Dahal

South Asia Watch on Trade, Economics & South Asia Watch on Trade, Economics & Environment (SAWTEE)Environment (SAWTEE)

OutlineOutline

An overview of electricity sector in Nepal

Reforms and Regulations in the Power

sector Conclusion and Recommendations

Programme 2

An overview of electricity sectorAn overview of electricity sector

Ranks 2nd in terms of water resources after Brazil on global scenario.

Hydro-power potential of 83,000 MW. Economically viable-42,000 MW. Only 40 percent of Nepalese have access

to electricity. 8 hours per day load shedding Additional power generation will not be

sufficient to meet demand

Programme 3

An OverviewAn Overview

Electricity rates in Nepal are among the highest in the world.

Hydro power sector has remained the state monopoly for a long time.

Concentration of generations, transmission and distribution (NEA)

Single Buyer dominates the market

Programme 4

Installed Capacity (MW)Installed Capacity (MW)

Programme 5

Source Source Capacity in MW Capacity in MW

1. Nepal Electricity Authority

a) Hydro 408

b) Thermal 55

2. Private Sector 148

Total (1+2) 611

Source: NEA, FY 2063/64 (FY 2006/07)

Electricity consumption and Electricity consumption and salessales

Programme6

(in GWh)

Category2002 2003 2004 2005 2006 2007

Domestic 557.94 617.11 676.365 758.189 805.72 911.51

Non-commercial 78.22 80.736 83.012 100.543 95.29 101.15

Commercial 90.426 92.741 108.122 109.308 120.3 143.88

Industrial 596.677 629.505 689.799 764 784.55 877.26

Water Supply and Irrigation 29.283 29.983 31.671 49.98 45.5 49.43

Street Light 39.517 45.803 55.196 54.861 63.24 69.48

Temporary Supply 0.282 0.348 0.251 0.393 0.87 1.28

Transport 5.635 5.53 5.471 5.803 5.65 6.56

Temple 2.476 2.811 4.111 4.58 4.77 4.77

Community Sales 5.717 4.74 5.581 6.034 9.18 14.57

Total (Internal Sales) 1400.456 1504.567 1653.998 1853.691 1936.07 2179.89

Bulk Supply (India) 133.857 192.249 141.235 110.702 96.55 78.25

Grand Total 1534.313 1696.816 1795.233 1964.393 2032.62 2258.14

Note- Provisional Figures, Subjected to Final AuditSource: NEA, FY 2063/64 (FY 2006/07)

Growth of ConsumersGrowth of Consumers ParticularsParticulars 20022002 20032003 20042004 20052005 20062006 2007*2007*

Domestic 848540 930554 1010719 1113740 1229750 1335748

Non-Commercial 8629 9722 9865 9950 10010 10385

Commercial 3898 5317 5454 6000 6170 6520

Industrial 18789 19833 21374 22500 23020 23963

Water supply 251 305 352 370 380 403

Irrigation 1353 1721 2557 3400 6450 13248

Street Light 1048 1229 1437 1500 1550 1622

Transport 49 48 48 50 54 54

Community sales 1 1 15 35 58 107

Total (Internal sales) 884530 970606 1053930 1159850 1277442 1392050

Bulk Supply (India) 5 5 5 5 5 5

Grand Total 884535 970611 1053935 1159866 1277447 1392055

Source: NEA, FY 2063/64 (FY 2006/07) Note: *Provisional Figures; subject to final edit

7Programme

Net system losses Net system losses (including Transmission and Distribution loss)(including Transmission and Distribution loss)

Programme 8

Description 2005/06 2006/07* Increase (Decrease)

Difference Percent

Net system losses (%)

25.12 24.94 (0.18) (1.00)

Source: NEA, FY 2063/64 (FY 2006/07) Note: *Provisional Figures (Subjected to Final Audit)

Policy and ActsPolicy and Acts

Hydro Power Development Policy, 1992

Opened doors for private sector involvement in power

generation

Electricity Act, 1992 An act to as per the Hydro Power Development Policy

1992

Programme 9

Policy and ActsPolicy and Acts

The Foreign Investment and Technology

Transfer Act, 1992 An Act made to provide for matters relating to foreign

investment and technology.

The Industrial Enterprise Act, 1992 An act made to facilitate industrial enterprise.

Proposed Electricity ActProposed Electricity Act

Unbundling of NEA: Separation of generation, transmission and distribution

A separate body for the regulation of this sector known as National Electricity Regulatory Commission

DOED – licensing of new generation, transmission, and distribution projects

DistributionDistribution Hydro Power Development Policy, 1992 has

mentioned that the electricity generated from a hydroelectric project must be distributed through the NEA.

12Programme

Regulatory BodyRegulatory Body Department of Electricity Development

(DOED) under the Ministry of Water Resources (MOWR) regulates the electricity sector.

DOED is responsible for assisting MOWR in the implementation of overall government policies related to the power/electricity sector.

Tariff Fixation Commission

Programme 13

Conclusion

Independent regulatory body.

Un-bundling of NEA on

generation ,transmission and distribution.

Encouraging private investors.

Enforcement of new electricity Act.

Creating conducive environment for

investment.

Thank You Thank You

Programme 15