Nepal’s Power Struggles

The recent removal of Kulman Ghising a few months before his tenure heading the National Electricity Authority (NEA) ended made headlines. Hitendra Dev Shakya, whose previous tenure ended amid similar behind-the-scenes politics that never saw a final court verdict, was put back in charge.

For many, Ghising was the architect of the end of 18-hour-a-day power cuts till a decade ago. His abrupt removal sparked outrage across the public sphere, and the political spectrum.

Leadership at the NEA has never been just about performance, it has long been entangled in political proximity, not merit. The agency is more than a power utility, it is more about control of budgets, contracts, and narratives.

As long as the lights stay on, many Nepalis will willingly overlook the messy compromises that greases the system. Appointments, removals, court cases, and backroom political bargain are the norm. Sometimes like with Ghising, a figure emerges as a public hero, sometimes, they do not.

A decade after routine load-shedding ended, political leaders still scramble to claim credit, over what should fundamentally be just the day-to-day work. The sector is mired in controversies, from metering disputes to ad hoc political committees, tariff issues, to negotiating cross border power trade.

Even basic statistics like electrification rates are held hostage to executive narratives with no clear standards and compliance on what counts as real access. Nepal's power sector seems to be running without a referee.

There are three agencies involved: the Ministry of Energy, the NEA, and the little-known Electricity Regulatory Commission (ERC), each with a distinct mandate, at least on paper.

In a well-regulated market, issues like metering disputes and executive appointments would barely register outside the industry. In Nepal, such decisions often spill into political crises and can shake the fate of governments. Yet, the ERC is rarely seen or heard, even when these issues strike at the heart of its regulatory mandate.

Blurred roles have left Nepal’s power sector in a state of chronic overlap. The ministry often interferes with operations, drawn by the quiet influence that comes with the turf: contracts, budgets, and visibility.

NEA straddles the line between implementer and influencer, while the regulator still seems hesitant to assert its space.

Created in 2019 after years of industry bargaining, the regulator’s job is to establish rules, resolve disputes, and bring predictability and fairness back to the system. And this critical role remains a blind spot in Nepal’s energy debate and power struggles.

Disputes that should fall under regulatory inquiry and consultation, from the Time-of-Day (ToD) meter disputes and industrial payment defaults, to the NEA’s role in cross border power trade negotiations have instead become political flashpoints.

Despite the politics, if a regulator cannot assert itself in matters squarely within its mandate like pricing, contracts, disputes, compliance, what exactly is it regulating?

We did not create this new regulator just to be another spectator. But that, for now, is all it seems determined to be.

The regulatory mess runs deeper into the way Nepal prices its electricity. By many measures, Nepal’s electricity sector has made real progress. The country now exports surplus power to India while still relying on imports during peak demand. In 2023/24, Nepal became a net electricity exporter for the first time, selling as much power as two and half months of domestic demand.

Every hydropower project under 100 megawatts is paid the same flat rate: Rs8.40 per kilowatt-hour in the dry season, Rs4.80 in the wet season. Hard or easy, near or remote, the price stays flat.

Whether a project is built right along the accessible roads of Trisuli corridor or in the remote gorges of the Karnali that demand new roads and transmission lines to generation sites, it is the same price.

The Chamelia Hydropower Project cost NPR 56 crore per megawatt to build. Chilime came in at about Rs140 million. In a functioning system, a regulator would benchmark these costs, scrutinise financial models, and adjust tariffs to reflect real-world differences.

To give the ERC some benefit of doubt: it is a young institution. But institutions do not mature by aging; they need to step up and take positions, enforce rules, intervene, and speak up when it’s easier to stay silent, whether the pressure comes from a utility boss or a political heavyweight, celebrity or not.

Nepal’s energy industry cannot afford a regulator that hides every time the stakes get high. That responsibility weighs even heavier today. Ram Prasad Dhital, the current Chair of the ERC, was not an outsider parachuted into the role. He served as one of the Commission’s founding cohort and has seen it through its formative years.

His second term cannot be for keeping the seat warm. But will the ERC act, or will it continue to choose the safer path of silence? As the ERC evolves, the challenge is not just about leadership. It must resist the prevailing tendency to solely rely on short-term contracts and familiar recycled bureaucratic networks.

Building a credible regulatory institution requires stability and technical depth, a professional core of energy experts, economists, engineers, financial analysts, and legal specialists who can audit costs, arbitrate disputes, and navigate the rapidly evolving regulatory terrains.

Tariffs must reflect real costs and real geographies. Export pricing must adapt to dynamic domestic and regional markets. Disputes must be settled through credible regulatory mechanisms rather than through endless political committees.

The real question now is not just what the ERC was created to do, but whether it has the will, the knowledge, and the courage to do it. And the longer it forgets that and drifts further to become another spectator, the deeper the price the industry will pay.

Bibek Raj Kandel works at the intersection of energy, climate, and political economy.