Budget 2026/27: Govt to split NEA into three agencies

KATHMANDU: The government has decided to divide the state-owned Nepal Electricity Authority into three agencies. Finance Minister Dr Swarnim Wagle announced the move while reading the budget estimates for fiscal year 2026/27 at the Federal Parliament.

Dr Wagle said the NEA will be restructured into three companies responsible for generation, transmission, distribution and trading of power in the country. The NEA currently operates as a state monopoly overseeing power production, distribution and transactions.

The minister said the government will cancel the licences of projects that have not begun construction despite having a Power Purchase Agreement and will adopt a new take-or-pay model for PPAs. He added that PPAs will be issued immediately for power projects with a capacity of less than 10 megawatts.

A legal arrangement will be made to allow the private sector to trade electricity in the international market, Dr Wagle said. To encourage private investment in large and reservoir-based projects, the government will permit promoters to sell up to 40% of their shares to the general public in the first year provided the promoter ensures 100% of the investment in such projects.