Nepal Electricity Authority To Establish Telecom Infrastructure Company With Rs 1 Billion Capital

Kathmandu: The Nepal Electricity Authority has decided to establish a telecommunications infrastructure company in Nepal. The decision was taken by the Authority’s board of directors a few days ago.

However, the decision has not yet been formally endorsed. Hitendradev Shakya, Managing Director of the Authority, said the proposal has been passed by the board but is yet to be finalized.

“The board meeting a few days ago passed the proposal. But the plan has not been signed by board members yet and has not taken full form. It will be clear only after monitoring whether the proposal is approved as it is or amended,” Shakya told TechPana.

Earlier, on 5 Ashad 2082, Shakya had approved the proposal to submit the plan to the board. According to the proposal, the government-owned Authority will establish a fully owned subsidiary named Nepal Digital Infrastructure Company to commercially utilize its telecommunications infrastructure. This includes OPGW fiber, ADSS fiber, electricity poles, underground ducts, and fiber assets.

The Authority plans to register the company as a telecommunications infrastructure provider. It will obtain the required license from the Nepal Telecommunications Authority and lease infrastructure to telecom operators, internet service providers, network service providers, Nepal Police, local governments, and other stakeholders.

The Authority has said that after the company is established, it plans to bring in a strategic equity partner with financial, technical, and managerial expertise in the second phase. The proposal is based on a detailed study supported by the Asian Development Bank. The study highlights the Authority’s extensive but underutilized telecom infrastructure and strong market demand.

According to the Authority, strategic reforms are required to make the infrastructure ‘plug-and-play’ ready. These include proper duct sealing, interior fittings of manholes, and easier fiber access. It has also stressed the need for fiber quality certification, competitive and transparent pricing, and wider acceptance of the utility-owned infrastructure model.

The Authority has identified inefficiencies caused by cable clutter on electricity poles, limited underground infrastructure, and poor coordination between road right-of-way offices and other government agencies. It says a robust operating model is needed for effective operation, maintenance, and service-level agreement management, making the subsidiary company essential.

The Authority plans to transfer telecom-related infrastructure assets to the subsidiary based on a detailed assessment. It is also preparing to mobilize investment from internal sources, ADB support, the Rural Telecommunication Development Fund, and possible co-investment with telecom service providers to operationalize underground infrastructure.

It has also proposed an electricity pole management strategy to reduce cable congestion, promote shared ADSS cables, and manage overcrowding. The Authority said it will develop a detailed financial model covering costs, revenue, return on investment, and financial risks to justify the project.

The Authority has also stated that it will work with the Telecommunications Authority to address congestion costs linked to past investments and coordinate with lenders, including ADB, to design infrastructure and debt repayment models.

Nepal Telecommunications Authority Director and Spokesperson Min Prasad Aryal said that no application has yet been received for a telecom infrastructure license from the Electricity Authority.

“As far as information from the licensing department shows, no such proposal has been submitted yet,” Aryal said. He added that the licensing process will begin only after the board decision is formally endorsed.

The Nepal Electricity Authority plans to establish the subsidiary with 100 percent ownership. The proposed authorized capital is Rs 1 billion, while the issued capital is set at Rs 500 million.

There is a proposal to increase the paid-up, issued, and authorized capital of the company as required. Even if other parties are brought in as shareholders in the future, the proposal clearly states that the Nepal Electricity Authority will retain at least 51 percent ownership.

The Authority has also proposed a seven-member board of directors for the telecommunications infrastructure company.

 

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