2 October, Kathmandu. The restructuring of the Nepal Electricity Authority has reached its final stage by dividing it into three separate companies. The Ministry of Energy, Water Resources and Irrigation is working to finalize the roadmap that is being prepared for the structural reform of the authority.
The government had announced the completion of the restructuring of the authority, which has been in discussion for a long time, through the budget of the current financial year 2083/84. In the budget, it is mentioned that the authority will be divided into three separate companies for power generation, transmission and distribution and trade.
According to the same announcement, the committee formed under the coordination of the head of the Ministry's Energy Division is preparing a blueprint for restructuring. According to the latest progress report of the Ministry, the committee is working on finalizing the roadmap by discussing various international models and practices.
The process of moving the authority's production, transmission and distribution and business related activities into separate institutional structures is proceeding. Under this, it is aimed to separate the various professional activities that are currently being conducted through the same organization and clarify their responsibilities, operation and management.
The Ministry of Energy had started the unbundling process since 2074. For this purpose, the government has already established companies like Electricity Generation Company, National Transmission Grid Company Limited, Electricity Trading Company and put them into operation. However, the government has said that the entire work of fragmenting the authority will be completed within the current financial year. According to the ministry, the work of creating a roadmap for that has reached its final stage.
Experts in the energy sector have been warning that new complications may be created when restructuring without a clear blueprint for the authority, including legal basis, asset management and staff adjustment.
Same authority, three different companies
According to the proposed restructuring, the government plans to create one company for power generation, another for transmission and a third for distribution and trade. This will pave the way for electricity generation, operation of transmission infrastructure, distribution of electricity to consumers and the work of electricity trading through separate structures.
Currently, the Nepal Electricity Authority is producing electricity, operating the national transmission system, providing electricity to consumers through the distribution network, and working on electricity buying and selling and trading.
By dividing these jobs into separate companies, it is expected that the responsibility, financial condition and performance of each sector can be evaluated separately. However, the Ministry said that the roadmap will clarify the ownership structure, jurisdiction, distribution of assets and liabilities and the detailed structure of operations of the proposed companies.
An announcement to complete restructuring within the budget
The government had announced the completion of the restructuring of the authority in the budget of the financial year 2083/84. Along with that, the policy of dividing production, transmission and distribution and business into three separate companies has been put forward.
The structural reform of the electricity sector has been taken forward by the government as another important policy step in the energy sector. Along with this, the issue of allowing the private sector to trade electricity in the international market, construction of transmission lines and arranging legal arrangements to trade electricity with wheeling charges is also included in the budget.
The unbundling of the authority can also affect the structure of the electricity market, the participation of the private sector and the management of the electricity business. However, for its actual implementation, it is necessary to determine the structure of the companies, arrange the legal and administrative arrangements and finalize the transitional management.
Now the roadmap will determine the implementation path
The ministry's committee is working on finalizing the restructuring roadmap based on the study and discussion of various international models. Therefore, the main task now is to clarify the issue of how and in what format the authority should be divided.
In the roadmap, the scope of the companies, organizational structure, distribution of assets and liabilities, personnel management, financial management and implementation schedule will be important.
Although the announcement to restructure the authority is not new, this time the goal is to complete the process within the budget, but preparations have been made to implement it. After the ministry finalizes the roadmap, the process of institutional restructuring of the authority will proceed based on it, the ministry said. The ministry claims that when the formation of the three companies will be completed and how to manage the assets, loans, employees and ongoing projects currently under the authority, the road map will be done.
