Private sector allowed into cross-border electricity trade for the first time

Energy, Water Resources and Irrigation Minister Birajbhakta Shrestha decided on Friday to give private companies letters of intent, along with in-principle approval, to prepare for cross-border electricity trade. This opens the way for private sector participation in power trading for the first time.

According to ministry sources, all 12 companies that applied have received letters of intent. These include Green Energy Power Trading, Nepal Power Trading and Management Limited, Nepal Power Exchange (Nepex), Asian Power Trading Company and Everest Power Trading.

Until now, private companies were limited to building and operating projects. They will now be able to look for markets inside and outside the country, identify buyers and partners, and prepare power purchase and sale agreements. Companies that received the letters of intent can carry out technical, financial and business feasibility studies and assess market demand and prices.

However, the letter of intent alone does not allow them to trade electricity. To begin formal transactions, they will need separate licenses and approvals as required by law. The decision is being seen as a step to widen the scope of private investment and bring structural reform to the energy sector.