The long-standing debate over restructuring the Nepal Electricity Authority (NEA) has resurfaced once again, with the government reviving discussions on “unbundling” the authority into separate entities responsible for generation, transmission, and distribution of electricity.

The issue has gained fresh momentum after the government, through the budget for fiscal year 2083/84, announced plans to revisit the restructuring process that has remained stalled for years.

Government Forms New Task Force

To move the process forward, Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha has formed a task force to prepare a roadmap and submit recommendations for restructuring the authority.

The task force is coordinated by Joint Secretary Sandip Dev and includes representatives from:

Ministry of Energy, Water Resources and Irrigation
Nepal Electricity Authority
Water and Energy Commission Secretariat

The committee has already begun preliminary discussions focused on two major issues:

How the authority should be structurally separated.
How employees currently working under NEA would be managed during the transition.

A 40-Year-Old Institutional Model Facing a 4,300 MW Reality

When Nepal Electricity Authority was established on Bhadra 1, 2042, Nepal’s total electricity generation capacity stood at only 107 MW.

At that time, a unified structure — where one institution handled generation, transmission, and distribution — was considered practical and efficient for a small electricity system with limited consumers.

However, Nepal’s energy sector has transformed dramatically over the last four decades.

Today, Nepal’s national power system has reached approximately 4,300 MW of generation capacity, supported by expanding transmission infrastructure, growing domestic demand, and increasing cross-border electricity trade.

Energy experts argue that managing such a large and increasingly complex electricity network under the same institutional structure designed four decades ago may no longer be sustainable.

This changing landscape has prompted the government to reopen the restructuring agenda.

25 Years of Policy Discussions — But No Implementation

Although the current debate appears new, efforts to unbundle NEA date back more than two decades.

1. Hydropower Development Policy 2058

The policy first formally introduced the idea of separating NEA functions and assigning responsibilities to autonomous public entities.

2. Draft Hydropower Policy 2065

A revised policy draft again proposed restructuring, but it never moved beyond the discussion stage.

3. Energy Action Plan 2072

The Ministry’s 19-point energy action plan proposed converting NEA into a holding company model and completing unbundling within one year. The proposal was never implemented.

4. NEA Corporate Business Plan 2076/77

NEA itself proposed dividing generation, transmission, distribution, and engineering directorates while creating separate distribution companies across all seven provinces.

Despite formal planning, the proposal remained inactive.

5. Asian Development Bank Roadmap

The Asian Development Bank (ADB) also prepared a restructuring roadmap for Nepal’s power sector reforms, but implementation never followed.

Electricity Bill 2080 Could Change the Framework

Unlike previous attempts that remained policy discussions, the current situation may carry stronger legal backing.

The Electricity Bill 2080, currently under parliamentary consideration, proposes changes that would prevent a single institution from simultaneously managing generation, transmission, and distribution activities.

The bill also promotes:

Establishment of sector-specific companies
Competitive electricity market development
Institutional restructuring of the power sector

At the same time, Nepal’s Constitution assigns electricity distribution responsibilities to provincial and local governments.

However, due to limited technical and administrative capacity at subnational levels, NEA continues to perform distribution functions nationwide.

The newly formed task force is therefore expected to examine whether restructuring can proceed under existing laws or whether legal amendments will be necessary.

The Biggest Challenge: Reform Without Weakening a Successful Institution

Despite repeated policy commitments over 25 years, restructuring has not materialized largely because of:

Limited political commitment
Resistance from employee unions
Concerns about institutional fragmentation

NEA is currently viewed as one of Nepal’s more commercially successful and profitable public institutions. This has created concern over whether splitting the authority could reduce operational efficiency or weaken financial performance.

The future of this restructuring effort will likely depend on how the task force addresses sensitive issues including:

Division of physical and financial assets
Protection of employee benefits and job security
Governance and autonomy of newly created companies

Whether this renewed initiative becomes a turning point for Nepal’s electricity sector—or joins the list of unfinished reforms—will ultimately depend on the recommendations of the task force and the government’s willingness to implement them.

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