Energy law of Nepal is mainly focused on the generation of electricity. The sector of electricity is mainly governed under the provisions of Electricity Act 2049 (1992) and Electricity Rules 2050 (1993).
Electricity Act 2049 (1992) refers to the following sources of electricity:
- hydroelectricity
- fossil fuel
- coal
- natural gas
- solar power
- wind power
- atomic energy
- any other source of electricity
Electricity Act and Rules prescribe the following types of licenses:
- Survey License – This license is required for survey works prior to construction works.
- Generation License – This license is required for construction of structures for generation of electricity
- Transmission License – This license is required for transmission of electricity from power plant to the grid
- Distribution License – This license is required for for distribution of electricity to the consumers
Department of Electricity Development is authorized to function as regulatory agency for energy production industries under the instructions from Ministry of Energy Irrigation and Water Resources. The Electricity Regulatory Commission is a statutory body established under the Electricity Regulatory Commission Act empowered to regulate the sector of power trade and tariff.
Foreign Investment is permitted in the energy sector with no limits on the ownership percentage.
Energy Sector also comprises of the Petroleum which is chiefly governed under the provisions of the Petroleum Act 2040 (1983). Petroleum Act protects the right of Government of Nepal to engage in Petroleum related works. Petroleum related works include exploration, development, production as well as refining, transport, storage, sales and distribution.
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