Kathmandu, Nepal - In a landmark decision, the Government of Nepal has repealed the controversial "Take and Pay" Power Purchase Agreement (PPA) provision following extensive advocacy and peaceful protests by the Independent Power Producers' Association of Nepal (IPPAN). This decision, announced by Deputy Prime Minister and Finance Minister Bishnu Paudel during a session of the House of Representatives, marks a significant victory for Nepal's private energy sector and its long-term energy security.
The Context: A Controversial Policy Shift
The Take-and-Pay PPA policy, introduced in the fiscal year 2082/083 budget, sought to align electricity production with consumption by restricting PPAs for Run-of-River (ROR) hydropower projects. The announcement sparked widespread concern among private energy producers, who argued that the policy would jeopardize projects with a combined capacity of 17,117 MW and risk the private sector's existing investment of NPR 109 billion.
IPPAN highlighted that the provision threatened Nepal’s energy ambitions, including becoming a net-zero emitter by 2045, increasing domestic electricity consumption, and establishing Nepal as a key regional energy exporter.
IPPAN’s Strategic Response
In response, IPPAN launched a phased protest strategy, including meetings with key government officials, memorandums, public awareness campaigns, and social media movements under the banner of "No Take and Pay." The association also engaged political leaders and stakeholders across Nepal to emphasize the policy’s potential negative impacts on the nation's energy future.
The movement gained significant traction, prompting the Ministry of Energy, Water Resources, and Irrigation to formally recommend the policy's repeal.
A Victory for Energy Security
The government’s revised approach now allows for PPAs based on financial risk assessments and assured energy consumption or export potential. This policy shift reopens halted projects, encourages fresh investments, and bolsters confidence among private energy developers. The decision aligns with Nepal’s Energy Development Roadmap 2081, aiming to achieve 13,500 MW of domestic consumption and 15,000 MW of electricity exports.
Broader Implications
The repeal of the Take-and-Pay provision is not just a win for private energy producers but also a boost to Nepal’s broader developmental goals. It ensures continued investment in hydropower projects, fosters energy-driven industrial growth, reduces reliance on imported fossil fuels, and positions Nepal as a competitive player in the global clean energy market.
The energy sector’s robust development is pivotal to achieving Nepal’s commitment to net-zero emissions by 2045, supporting electric vehicle adoption, and ensuring sustainable economic growth through industrialization and job creation in remote regions.
Acknowledgments and Future Prospects
IPPAN has expressed gratitude to all stakeholders, including policymakers, political leaders, media representatives, and civil society, for their support in achieving this outcome. The association is committed to working collaboratively with the government to enhance energy production, streamline transmission line development, and expand electricity trade opportunities.
This milestone reinforces Nepal’s path toward energy independence, sustainable growth, and economic prosperity.
