Kathmandu, July 2025 - The Independent Power Producers’ Association Nepal (IPPAN) has called for urgent government reforms and stronger facilitation to fully harness Nepal’s vast hydropower potential. At its 23rd Annual General Meeting held in Kathmandu, IPPAN Chairperson Mr. Ganesh Karki emphasized the pivotal role of the private sector in transforming Nepal into a net electricity exporter and unlocking its hydropower future.
In a packed hall attended by former Prime Minister Sher Bahadur Deuba, Energy Minister Deepak Khadka, secretaries, diplomats, and private stakeholders, Mr. Karki presented both achievements and frustrations faced by the independent power producers (IPPs) in recent years.
From Power Cuts to Power Exports
Nepal’s electricity generation capacity has surged from just 252 MW before liberalization to over 3,625 MW today-more than 81% of which has been developed by the private sector. With 4,288 MW currently under construction and 4,210 MW awaiting power purchase agreements (PPAs), the sector is brimming with momentum.
Last year, Nepal exported electricity worth NPR 1.7 billion and aims to reach NPR 2.3 billion this fiscal year. Long-term deals with India-including a landmark agreement to export 10,000 MW over 10 years-and growing interest from Bangladesh underscore Nepal’s rising regional energy significance.
Barriers and Bottlenecks
Despite this progress, IPPAN warned of multiple roadblocks that threaten to derail the country’s hydropower ambitions:
Delays in PPAs: Many projects, especially under 10 MW, are still awaiting PPA approvals from the Nepal Electricity Authority (NEA), even after the government committed to removing the controversial "take-and-pay" clause.
Legal Uncertainty: A Supreme Court order halting construction in national parks and forests has frozen nearly 20,000 MW worth of projects, sparking fears of long-term stagnation.
IPO Stalemate: IPOs of hydropower companies have been on hold for nearly two years due to conflicting parliamentary decisions and inaction from regulatory authorities.
Policy Paralysis: Key legislation like the new Electricity Bill 2080 BS has sparked alarm in the private sector for lacking investor-friendly provisions and potentially undermining existing projects.
Revenue Conflicts: Local governments are reportedly imposing unauthorized taxes on hydropower operators, creating further complications.
A Roadmap in Limbo
In late 2024, the Government of Nepal unveiled an ambitious Energy Development Roadmap 2081, which targets 28,500 MW of capacity by 2035. But IPPAN warns that unless obstructive laws are amended and implementation capacity is increased, this blueprint could meet the fate of earlier failed energy plans.
IPPAN has called for the declaration of an “Energy Development Decade” to fast-track approvals, simplify land and forest access, suspend obstructive clauses, and empower private energy trading and distribution.
Private Driving, Government Backing
Mr. Karki reiterated the association’s motto: “Private Driving, Government Backing”. He urged political leaders and government institutions to act as enablers, not obstacles, for the hydropower industry.
“Without private sector participation, Nepal would still be in darkness,” said Mr. Karki. “Now, we are not asking for favors-we are asking for facilitation.”
He thanked key political figures and government officials for earlier breakthroughs-including the opening of Indian and Bangladeshi markets-but stressed that bureaucracy, legal ambiguity, and regulatory delays must be resolved to maintain momentum.
A Sector with High Stakes
Hydropower remains Nepal’s most promising path to long-term economic growth, foreign exchange earnings, and industrialization. With over NPR 300 billion in private investment projected over the next decade, the sector could be a key lever in addressing unemployment, trade deficits, and fossil fuel dependency.
Yet, the private sector warns that without government action now, the window of opportunity could close-and Nepal’s energy revolution may remain incomplete.
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