The chairman of the Independent Power Producers’ Association, Nepal (IPPAN), has stated that Nepal is experiencing excessive electricity wastage during the monsoon season due to its inability to export electricity efficiently. The Nepal Electricity Authority (NEA) alongside private hydro and solar energy producers can generate approximately 4,300 megawatts during the monsoon. However, domestic demand stands at around 2,500 megawatts, and only about 1,200 megawatts are exported to India and Bangladesh, according to NEA officials.
The spokesperson for the authority responsible for electricity procurement, sales, export, and distribution has contested the full accuracy of the private producers’ claims. Rajan Dhakal explained that under power purchase agreements, the authority has been compensating the production companies even when electricity is not utilized. During the roughly four months of the monsoon, electricity is produced at full capacity, but in winter production falls to only 15 to 30 percent, resulting in shortages for industries and surplus wastage in the monsoon season.
According to IPPAN chairman Mohan Dangi, approximately 900 to 1,000 megawatts of electricity is wasted during the monsoon period. However, NEA spokesperson Dhakal clarified that not all plants operate at full capacity throughout the monsoon. Until last year, the authority paid for electricity based on the ‘Take or Pay’ policy stipulated in contracts. Yet, IPPAN has noted that ‘Take or Pay’ agreements are less prevalent among river flow-dependent hydro projects.
The private sector is advocating for permission to export electricity. “Seven to eight of our member companies have applied for export permits. A policy allowing private entities to export electricity and build transmission lines is essential if the government is willing,” Dangi emphasized. Meanwhile, the Nepal-India secretarial-level energy talks have reached an agreement to expand electricity trade between the two countries. Under this agreement, Nepal will be able to export up to 1,850 megawatts of electricity through two cross-border transmission lines from India.
