Kathmandu. The government has provided a letter of intent to the private sector to prepare for cross-border electricity trade with the objective of making Nepal’s electricity sector competitive and market-oriented from a production-oriented structure.

With this, an important step has been taken to involve the private sector involved in electricity trade.

According to the decision of the Ministry of Energy, Water Resources and Irrigation, the companies receiving the letter of intent will be able to study the domestic and foreign electricity market, identify potential buyers and business partners, carry out technical and financial feasibility study and make necessary business preparations.

In the context of expanding Nepal’s hydropower generation capacity, the main objectives of this arrangement are to ensure a sustainable market for the electricity produced, identify new opportunities for electricity trade, and expand the potential for private investment. It is expected to provide a basis for the private sector to expand its role in the field of electricity production as well as trade and market development.

The contribution of the private sector has been important in the development of Nepal’s energy sector. It is believed that the arrangement of involving the private sector in the preparation of electricity trade will help in regional energy cooperation, possibilities of cross-border power trade, and identifying new opportunities for investment.

Letter of Intent is not a license to trade electricity

If the letter of intent is received, the concerned company will not be able to buy or sell electricity immediately. In order to start the real electricity business, the necessary legal provisions, licenses, approvals of the concerned bodies and access to the transmission system will have to be fulfilled as per the prevailing laws.

The government’s move is expected to help Nepal’s power sector move towards greater coordination between production, market development, and regional trade. Diversification of markets and development of business opportunities along with the expansion of power generation will be crucial for Nepal’s long-term energy strategy.