Businessmen have welcomed the entry of private sector in electricity business: Narendra Ballabh Pant

Kathmandu. With the government moving ahead with the plan to issue a letter of intent (LoI) to the private sector to prepare for cross-border electricity trade and after completing the necessary legal and regulatory procedures, the door to new business opportunities in the energy sector has opened. Narendra Ballabh Pant, vice-president of IPPAN, an association of independent power producers, said the move was welcomed by the private sector.

According to Pant, the private sector, which has been investing in power generation, is now looking for opportunities to participate in power trading. It is expected that the arrangement regarding the letter of intent put forward by the government will help to identify the potential market, discuss with domestic and foreign business partners and prepare for the possible agreement of purchase and sale of electricity.

"Giving the private sector, which is limited to electricity production, the opportunity to participate in business as well is a positive step for the development of the energy sector. It will encourage private investors to find new business opportunities and contribute to the expansion of Nepal's electricity business," said Pant.

Emphasis on market expansion along with production

As Nepal's hydropower production capacity is expanding, it is becoming important to ensure internal and external markets for the produced electricity. For this, there is a need to promote generation, transmission infrastructure, market access and regional energy trade in an integrated manner.

The government's new arrangements are expected to provide opportunities for private companies to identify buyers and business partners in potential regional markets including India, study market demand and prices, and evaluate the commercial potential of buying and selling electricity.

With this, the investment of the private sector will not be limited to electricity production and will also expand towards market development and commercial activities. Also, planning of new energy projects according to potential market demand can also help.

Letter of intent followed by permit and actual business

According to the government regulations, getting the letter of intent is not the final permission to start electricity business. In order to conduct real business, the companies have to fulfill the necessary permits, regulatory approvals, technical standards and procedures related to access to the transmission system according to the prevailing laws.

In particular, for cross-border electricity trade, relevant country's legal arrangements, market entry approvals, transmission capacity and bilateral coordination will be important.

Therefore, taking the decision to issue a letter of intent as the initial stage of market identification and commercial preparation, it seems necessary to complete the subsequent legal, institutional and technical processes on time.

Nepal's opportunity in the regional energy market

As Nepal is increasing hydropower production, effective cooperation between the public and private sectors is necessary to make the electricity business competitive, transparent and sustainable. Private sector participation can help expand the range of potential trading partners, attract new investments and strengthen Nepal's presence in regional energy markets.

However, the actual achievement of this arrangement will depend not only on the distribution of letters of intent, but also on the creation of the necessary legal framework, clear procedures for business licenses, availability of transmission infrastructure and ensuring effective access to international markets.

In the context of the government's welcome by the private sector, converting Nepal's hydropower potential into an economic opportunity by connecting power generation, transmission and trade has become both a major challenge and an opportunity.