The government has drafted a directive that would allow private sector entities to engage in direct electricity trading through open access to the national grid, marking a significant policy shift after years of regulatory hesitancy. The Electricity Regulatory Commission (ERC) has released the draft of the directive for public consultation.

Historically, the government has denied licenses to private players for power trading, citing the absence of an enabling act. However, the new directive aims to open the market even before the proposed Electricity Bill—currently under parliamentary review—is passed into law. The bill includes provisions for private sector participation in electricity trade.

ERC Chairperson Dr. Ram Prasad Dhital stated that the directive will provide a legal pathway for private companies to buy and sell electricity if certified by the designated nodal agency, even in the absence of a finalized act. The Nepal Electricity Authority (NEA) has been proposed as the nodal agency responsible for determining transmission availability and system capacity.

The initiative has been welcomed by industry stakeholders. Balaram Khatiwada, Secretary General of the Independent Power Producers' Association Nepal (IPPAN), called the move a positive step that aligns with the broader provisions of the Electricity Bill.

Under the draft, open access would allow independent power producers (IPPs), power trading companies, and large consumers to use the grid infrastructure on a non-discriminatory basis. Proponents argue that this policy will attract greater investment in the power sector, enhance market competitiveness, reduce the concentration of risk among service providers, and facilitate cross-border electricity trade.

According to the draft, private hydropower projects with a minimum capacity of 1 MW would be eligible to sell electricity via open access. These plants must be connected to at least an 11 kV line. Projects with a capacity of 5 MW or more must be linked to 33 kV or higher grids. Electricity can be sold to industrial and commercial consumers. For cross-border electricity trade, the minimum transaction volume under open access must be 10 MW. Export will be permitted only if a surplus remains after meeting domestic demand.

The directive also outlines access periods: producers can use the grid for 24 hours under short-term access, up to one year under medium-term, and more than five years under long-term arrangements, depending on the terms of their power purchase agreements.

If implemented, this regulatory shift could pave the way for a more competitive electricity market in Nepal, increasing opportunities for private participation and regional trade.