Transmission, Grid Connection and Open Access

Nepal has two electricity problems at once. In the monsoon it generates power it cannot move, spilling roughly a thousand megawatts. In the dry season it cannot generate enough and imports. Both are transmission problems before they are generation problems, and both explain why a country with 16,425 MW of licensed capacity waiting for offtake is building lines rather than plants.

The network today

The Nepal Electricity Authority’s Transmission Directorate reported the following for FY 2082/83:

Voltage	Circuit-kilometres
400 kV	807
220 kV	1,324
132 kV	4,464
66 kV	514
Total	7,110

The network grew by 349 circuit-kilometres during the year, and substation capacity reached 15,541 MVA after an increase of 1,418 MVA. The 400 kV Khimti–Barhabise line was commissioned in the same fiscal year and Markichowk–Bharatpur 220 kV was completed. Work continued on the Koshi Corridor 220 kV second circuit, the 45-kilometre Lekhnath–Damauli 220 kV line, and Tumlingtar–Sitalpati 220 kV, expected in November 2026.

The shape of that table is the story. More than sixty per cent of the network still sits at 132 kV, a voltage suited to a system an order of magnitude smaller than the one being built. Corridor construction at 220 kV and 400 kV is what turns licensed capacity into deliverable energy, and it runs behind the generation pipeline rather than ahead of it. The FY 2026/27 budget allocated NPR 70 billion to transmission construction.

Cross-border links

One high-capacity international link is in service: the 400 kV Dhalkebar–Muzaffarpur line to Bihar, which together with smaller 132 kV connections supports export of around 1,000 MW. The Butwal–Gorakhpur 400 kV line, a joint venture between the Authority and Power Grid Corporation of India, was under construction according to the Authority’s own directorate for FY 2082/83, with Nepal’s 18-kilometre section prioritised for early completion. We state nothing further about its commissioning.

Export capability is a single-corridor proposition today. That is a concentration risk for the whole export thesis discussed in cross-border power trade, licence expiry and project exit. It also explains why a project’s connection point matters as much to its economics as its head and flow.

The grid code

Connection standards sit in the Nepal Electricity Grid Code 2080, issued by the Electricity Regulatory Commission and binding on generation, transmission, distribution and trading licensees. That is a real shift from the earlier position, in which technical connection terms were effectively the utility’s to set.

The Electricity Act 2049 treats transmission and distribution as licensable activities in their own right, with terms of up to fifty years, and the Department of Electricity Development keeps separate survey and construction licence registers for transmission lines. Private transmission is lawful in Nepal. The network, all the same, is the Authority’s.

Section 6 adds a constraint that becomes important once open access is in play. A distribution licence carries exclusivity over its area for the whole of its term, unless the existing licensee’s capacity is found insufficient. A large consumer sitting inside an exclusive distribution area and buying energy from a third-party generator is exercising a right created by directive against a statutory monopoly created by primary legislation. That tension has not been tested.

Open access eligibility

The Open Access Directives 2082 require non-discriminatory access to transmission and distribution networks. On the eligibility reported for the directive:

• Generators of 5 MW and above
• Captive generators of 1 MW and above connected at 11 kV or higher
• Consumers of 5 MW and above at 33 kV or higher
• Distribution and trading licensees

Transactions are tiered: long-term at five years or more, medium-term from one to five years, and short-term from 24 hours to one year, with a minimum transaction size of 1 MW.

We could not read those thresholds off the Commission’s own copy, which is published as a scan with no machine-readable text. That is more than a complaint about file formats. A directive whose operative thresholds cannot be searched, quoted or checked automatically by the parties it binds is harder to enforce and easier to administer inconsistently.

Who administers open access

Open access is the only mechanism now in existence capable of producing a second buyer for Nepali electricity, and so the only structural answer to the offtake queue described in power purchase agreements and the offtake constraint. Whether it works turns on three operational functions: granting access, scheduling the transaction, and settling the difference between scheduled and delivered energy.

All three are performed by the system operator. The system operator is part of the Nepal Electricity Authority. The Authority is the incumbent buyer whose position open access exists to dilute, the owner of the constrained network, and a generator competing with the applicants.

The Commission has been building against that problem rather than around it. The grid code in 2080 set the technical rules and the directives in 2082 created the right. On 14 August 2026 it issued balancing and settlement directives, which decide who pays when scheduled and delivered energy diverge, and a grievance redressal mechanism for open access customers that gives a complaint route bypassing the utility. Those two instruments are what turn a right into something a counterparty can price.

What is still missing from the published record is money. The Commission’s tariff order page carried no transmission tariff, wheeling charge or cross-subsidy determination when we checked it. An open access transaction has to pay for use of the network. Until those charges are published and stable, neither party can model the commercial case for a bilateral supply contract. We state no figures for them.

Connecting the plant

The corridor from a powerhouse to the nearest substation is the developer’s problem, and often the largest single risk in a Nepali project outside offtake. It runs through forest land, engages the Forest Act 2076 approvals covered in land, forest, environmental and social approvals, and has to reach a substation that may itself be scheduled rather than built.

The Electricity Act 2049 frames two directions in which that energy can then travel: bulk sale into the national grid, and import or export subject to government approval. Neither route obliges the network owner to receive a given quantity at a given point. A project can hold a valid generation licence, a completed plant and a signed purchase agreement, and still be capped by the rating of the line it connects to.

The practical connection questions are therefore narrow and concrete. Which substation, at what voltage, with what firm capacity, and on whose schedule. Whether the evacuation line sits in the Authority’s funded programme or only in its planned one. Whether the project’s own line is licensed as a transmission line in its own right, since the Act treats transmission as a separately licensable activity. And what happens to the revenue model if the corridor is late, which a take-and-pay agreement answers very differently from a take-or-pay one.

What to watch

Three observable things over the next two years will settle what cannot be settled here. Whether wheeling and cross-subsidy charges are published as a tariff order rather than negotiated case by case. Whether any long-term open access transaction, five years or more, is actually approved; that is the tier a lender could underwrite. And whether the Authority’s restructuring into separate generation, transmission and distribution companies is given effect by legislation. Unbundling is the only route by which the central conflict disappears rather than being managed.

Sources

1. Transmission Directorate — A Year in Review 2082/83

   Nepal Electricity Authority · Published 19 August 2026 · Tier 2 — Official publication

   Supports: Circuit-kilometres by voltage level and the 349 circuit-km added; substation capacity of 15,541 MVA and the 1,418 MVA increase; the Dhalkebar–Muzaffarpur 400 kV line in operation; Butwal–Gorakhpur 400 kV under construction as an NEA–Power Grid joint venture with Nepal's 18 km segment prioritised; Khimti–Barhabise 400 kV commissioned; Markichowk–Bharatpur 220 kV, Koshi Corridor 220 kV, Lekhnath–Damauli 220 kV and Tumlingtar–Sitalpati 220 kV in progress.

   Accessed 26 August 2026

2. Open Access to the Electricity Transmission and Distribution System Directive, 2082

   Electricity Regulatory Commission · Dated 2082; posted to the Commission's website 15 February 2026 · Tier 1 — Primary legal instrument

   Supports: The existence, title and date of the directive. The published PDF is a scanned image; its substantive thresholds could not be read from it.

   Accessed 26 August 2026

3. Nepal Electricity Grid Code, 2080

   Electricity Regulatory Commission · Posted to the Commission's website 15 February 2026 · Tier 1 — Primary legal instrument

   Supports: That connection and system operation standards binding generation, transmission, distribution and trading licensees are set by the Commission.

   Accessed 26 August 2026

4. Balancing and Settlement Directives, 2083

   Electricity Regulatory Commission · Posted 14 August 2026 · Tier 1 — Primary legal instrument

   Supports: That rules for settling deviations between scheduled and delivered energy were issued in August 2026.

   Accessed 26 August 2026

5. Grievances Redressal Mechanism for Open Access Customers Directives, 2083

   Electricity Regulatory Commission · Posted 14 August 2026 · Tier 1 — Primary legal instrument

   Supports: That open access customers were given a dedicated complaint route in August 2026.

   Accessed 26 August 2026

6. Electricity Act, 2049 (1992) — English text

   Government of Nepal, published by the Department of Electricity Development · 1992 — in force · Tier 1 — Primary legal instrument

   Supports: Section 3 requiring a licence for transmission and distribution; section 5(2) permitting licences of up to fifty years; section 6 restricting a distribution area to a single licensee for the term of that licence; sections 21 and 22 on bulk sale to the national grid and on import and export.

   Accessed 26 August 2026

7. India's rising power demand offers Nepal a market — but not forever

   The Kathmandu Post · 23 August 2026 · Tier 6 — Professional or news source

   Supports: That approximately 1,000 MW is wasted for lack of transmission infrastructure, and that export capability is around 1,000 MW through the 400 kV Dhalkebar–Muzaffarpur line plus 132 kV lines.

   Accessed 26 August 2026