The electricity act 1992 has been enacted to manage the survey, generation, transmission and distribution of electricity and to standardize and safeguard electricity services.

Article 3 states“No license is required to survey, generate, transmit or distribute electricity from the projects of capacity ranging from 100 kW to 1000 kW. However, information will be provided to the designated authority about such a project.”

Section 4 subsection -1 of the act states that any person or corporate body who wishes to conduct survey, generation, transmission or distribution of electricity over 1 MW shall be required to submit an application to the prescribed officer along with economic, technical, and environmental study report. Section 24 states, “While carrying out electricity generation, transmission or distribution, it shall be carried out in such a manner that no substantial adverse effect be made on environment by the way of soil erosion, flood, landslide air pollution etc''. Pursuant to the act, the proponent requested the then Ministry of Water Resources (MoWR), through the Department of Electricity Development, to issue a survey license for the proposed Project.