Nepal will issue intent letters to private companies preparing for cross-border electricity trading. Actual operations await legal amendments, domestic licences and Indian regulatory approvals.Image used for representational purposes onlyKathmandu,Oct 25, 2026 15:30 ISTNepal has decided to issue letters of intent to private companies seeking to enter cross-border electricity trading, according to a report by news agency Press Trust of India.

However, the companies will have to wait for amendments to the country's Electricity Act and obtain licences before they can begin trading.The Ministry of Energy, Water Resources and Irrigation took the decision on Friday. Twelve companies, including Nepal Power Exchange, NIFRA Trading and Energy Exchange, Green Energy Power Trading and Trans Asia Power Trading, have applied for letters of intent, The Kathmandu Post reported on Saturday.The letters will allow the companies to study potential markets, identify partners and prepare for electricity trading.

They will not allow them to enter into power purchase agreements, book transmission capacity or use open access for electricity transmission.The Nepal Electricity Authority is currently the country's designated agency for cross-border electricity trade with India. Nepal also exports hydropower to Bangladesh through India's transmission network.

The Energy Ministry has begun the process of amending the Electricity Act, 1992, to establish a legal framework for licensing private electricity traders. The proposed amendment has been sent to the Ministry of Law for approval and will then require the Cabinet's endorsement, PTI reported.Private companies can obtain electricity trading licences only after the law is amended, Energy Ministry Joint Secretary Sunil Paudel was quoted as saying.

The letters of intent will remain valid for up to two years, during which the companies must submit quarterly progress reports to the ministry. Even after obtaining a licence in Nepal, the companies will need approval under India's cross-border electricity trade guidelines to export power to India or other countries through power exchanges, according to the report.

The letters of intent will therefore allow them to prepare for cross-border trade, while actual trading will depend on legal amendments and regulatory approvals.With PTI Inputs- Ends