Kathmandu June 5, 2025 - It was lightly raining in Kathmandu on Thursday afternoon, but the conference hall of Everest Hotel was heated with intense discussions. For the first time, the Independent Power Producers’ Association of Nepal (IPPAN) organized a public event with black banners. There were no government representatives, no members of parliament, and no ministers present. The participants were limited to energy entrepreneurs and journalists facing crises, one after another.
Without any formalities like the national anthem or inauguration, the event began with a slogan:
"Government, the 'Take and Pay' PPA is wrong; take it back, take it back, take it back!"
Afterward, the floor was opened for the promoters to share their concerns. They emphasized the need for a phased protest against the government’s announcement in the upcoming fiscal year's budget to implement the 'Take and Pay' provision in Power Purchase Agreements (PPA) for river-run-of-the-river (RoR) hydropower projects.
Their anger did not stop there. During the meeting of license-holding promoters of river-run hydropower projects, they expressed that if the government did not rectify this provision, phased protests should escalate toward a 'blackout.'
What Issues Were Raised?
The concerns extended beyond the 'Take and Pay' provision. The participants criticized policies such as signing contingency PPAs for completed projects and then not purchasing electricity for years, allowing the issuance of shares only after lighting the project—despite requiring capital during construction, barring IPO issuance for projects that have taken billions in loans until they achieve 90% net worth, and not extending the Commercial Operation Date (RCOD) even when delays benefit the Nepal Electricity Authority but penalize the promoters. Furthermore, they raised concerns about not extending project licenses when delays occur due to forest study agreements. These actions were perceived as deliberate attempts to destroy the energy sector, according to the promoters present at the meeting.
Planned Actions
The promoters plan to initially submit a memorandum to ministers and the prime minister. If this does not resolve the issue, they will organize a gathering of investors, including both founders and general shareholders of hydropower, and stage sit-in protests. If their demands are still not addressed, they are prepared to shut down electricity production and initiate a 'blackout.'
Addressing the gathering, IPPAN President Ganesh Karki stated that no other option but decisive protest remains to address these issues. He remarked that a small sentence in the budget has jeopardized the future of hydropower projects with a total capacity of 17,000 MW, putting investments exceeding NPR 66 billion at risk.
"The Finance Minister, Energy Minister, Secretary of Energy, and CEO of Nepal Electricity Authority claim they were unaware of how the 'Take and Pay' provision made it into the budget. Despite not being proposed officially, it appears that oral proposals based on power and influence have jeopardized the energy sector in the budget. If this provision is not corrected, the energy sector will collapse. If the sector collapses, so will the producers. Producers are now left with two options—either be prepared to hang themselves or to protest," he said.
Senior Vice President of IPPAN, Mohan Kumar Dangi, stated that just as the carpet industry was previously destroyed when it thrived, the same playbook is now being applied to destroy the energy sector.
"This is not an overnight issue. Steps like locking 33% of promoters’ shares, barring IPOs before lighting the project, halting the development of 20,000 MW of projects through a Supreme Court verdict, and now blocking the development of another 17,000 MW with the 'Take and Pay' provision are all calculated moves. The only option now is a tougher protest," he added.
IPPAN General Secretary Balram Khatri announced that a struggle committee led by IPPAN Senior Vice President Mohan Kumar Dangi would be formed to develop the modality for protest programs.
Assistant General Secretary Prakash Dulal expressed concerns that, beyond the 'Take and Pay' provision, dangerous provisions in the Electricity Act are being introduced. He warned that entrepreneurs in the energy sector would have no choice but to flee if the Act comes into effect, urging attention to how private sector issues are being addressed in the Act.
The promoters also stated that the Water Resources Act, which requires 100% agreement from local residents for water usage, is even more dangerous than the Electricity Act. They claimed that this provision would make it impossible to develop hydropower projects.
Recent Meetings with Ministers
On Tuesday, an IPPAN delegation approached the Finance Minister alongside the Energy Minister to discuss the 'Take and Pay' provision. While the Finance Minister stated that the provision would need to be reviewed, the Energy Minister expressed solidarity with the private sector and mentioned that he would join protests if the provision is not rectified.
Although the Energy Ministry has outlined a roadmap for achieving 28,500 MW of electricity production, the Finance Ministry’s budget does not align with this vision. Instead, it jeopardizes investments in the sector by introducing the 'Take and Pay' provision for river-run-of-the-river projects.
If this provision remains, only semi-reservoir hydropower projects of around 2,000 MW currently in the study phase, representing approximately three dozen projects, will have PPAs.
