1. Electricity Reforms and Regulations in Nepal Navin Dahal South Asia Watch on Trade, Economics & Environment (SAWTEE)

2. Outline An overview of electricity sector in Nepal Reforms and Regulations in the Power sector Conclusion and Recommendations Programme2

3. An 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 Programme3

4. An 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 Programme4

5. Installed Capacity (MW) Programme5 Source 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)

6. Electricity consumption and sales Programme 6 (in GWh) Category 200220032004200520062007 Domestic 557.94617.11676.365758.189805.72911.51 Non-commercial 78.2280.73683.012100.54395.29101.15 Commercial 90.42692.741108.122109.308120.3143.88 Industrial 596.677629.505689.799764784.55877.26 Water Supply and Irrigation 29.28329.98331.67149.9845.549.43 Street Light 39.51745.80355.19654.86163.2469.48 Temporary Supply 0.2820.3480.2510.3930.871.28 Transport 5.6355.535.4715.8035.656.56 Temple 2.4762.8114.1114.584.77 Community Sales 5.7174.745.5816.0349.1814.57 Total (Internal Sales) 1400.4561504.5671653.9981853.6911936.072179.89 Bulk Supply (India) 133.857192.249141.235110.70296.5578.25 Grand Total 1534.3131696.8161795.2331964.3932032.622258.14 Note- Provisional Figures, Subjected to Final Audit Source: NEA, FY 2063/64 (FY 2006/07)

7. Growth of Consumers Particulars200220032004200520062007* Domestic8485409305541010719111374012297501335748 Non-Commercial86299722986599501001010385 Commercial389853175454600061706520 Industrial187891983321374225002302023963 Water supply251305352370380403 Irrigation1353172125573400645013248 Street Light104812291437150015501622 Transport4948 5054 Community sales11153558107 Total (Internal sales)8845309706061053930115985012774421392050 Bulk Supply (India)555555 Grand Total8845359706111053935115986612774471392055 Source: NEA, FY 2063/64 (FY 2006/07) Note: *Provisional Figures; subject to final edit 7Programme

8. Net system losses (including Transmission and Distribution loss) Programme8 Description2005/062006/07*Increase (Decrease) DifferencePercent Net system losses (%) 25.1224.94(0.18)(1.00) Source: NEA, FY 2063/64 (FY 2006/07) Note: *Provisional Figures (Subjected to Final Audit)

9. Policy 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 Programme9

10. Policy 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.

11. Proposed 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

12. Distribution Hydro Power Development Policy, 1992 has mentioned that the electricity generated from a hydroelectric project must be distributed through the NEA. 12Programme

13. Regulatory 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 Programme13

14. 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.

15. Thank You Programme15