Kathmandu: Around 16,140 MW of hydropower projects in the private sector are awaiting Power Purchase Agreements (PPAs), with approximately Rs. 66 billion already invested in these projects, the Independent Power Producers’ Association, Nepal (IPPAN) has said. Expressing concern that delays in PPAs have put significant investments at risk, IPPAN has called for the private sector to be allowed to engage in electricity trading if the Nepal Electricity Authority (NEA) cannot immediately move forward with the PPAs.
Speaking at the 41st anniversary ceremony of the Nepal Electricity Authority, IPPAN President Mohan Kumar Dangi said the private sector is ready to help achieve the government’s target of generating 30,000 MW of electricity within 10 years. However, he said achieving the target will require changes not only in generation but also in electricity market expansion and the trading structure.
According to Dangi, the NEA has so far signed PPAs for projects totaling around 12,000 MW. Of these, approximately 3,500 MW of privately developed projects have already entered operation. Around 6,200 MW are under construction, while approximately 2,300 MW are at the financial management stage. However, another 16,140 MW of projects are still awaiting PPAs, he said.
Dangi said that given the substantial private-sector investment already made in projects awaiting PPAs, the agreements can no longer be treated merely as an administrative process.
“Nearly Rs. 66 billion has been invested in projects awaiting PPAs. Seeking a license for the private sector to trade electricity is not a matter of choice; it is a necessity to protect that investment,” Dangi said.
He said that if the NEA is unable to guarantee a market for private-sector electricity generation, the private sector should be allowed to trade electricity itself. According to him, the private sector is ready to generate electricity, sell it to the NEA, increase domestic consumption and expand exports. However, if the NEA cannot conduct electricity trading at the required scale, electricity producers should be granted trading rights, he argued.
Proposal to Change Project Design to Increase Generation
IPPAN President Dangi has proposed reviewing the designs of hydropower projects under construction as well as those yet to begin construction to maximize the use of Nepal’s available water resources.
He said many projects are currently designed based on Q40, meaning 40% of the river’s available flow. He proposed shifting to Q25-based designs, arguing that this could significantly increase project capacity and overall energy generation.
Dangi claimed that a task force led by a joint secretary of the Ministry of Energy and including a deputy managing director of the NEA had concluded that project capacity could increase by up to around 85% by shifting from Q40 to Q25 designs.
He cited the Arun-3 project as an example of a project designed around higher water flows. According to him, if project designs and capacities can be reviewed in this manner, Nepal’s potential electricity generation capacity could exceed 50,000 MW, including projects currently awaiting PPAs.
However, changing the design flow of hydropower projects would require detailed technical assessments of factors including project costs, flood risks, generation reliability, turbine utilization, transmission infrastructure and electricity purchase rates. Such technical studies would therefore be necessary before implementing the proposal.
Focus on Expanding the Market Alongside Generation
Dangi indicated that one of the major challenges facing Nepal’s electricity sector is market expansion rather than generation alone, emphasizing the need to increase domestic consumption.
Noting that Nepal has made significant progress in rural electrification, he said the country now needs to identify areas where electricity consumption can be increased. In particular, he said electricity could replace LPG gas for cooking.
For this, he proposed selecting one ward from one local government in each of Nepal’s 77 districts as a model area, supplying reliable electricity through dedicated feeders and declaring those areas LPG-free zones. If successful, the approach could be expanded to other areas by promoting electric stoves and other electrical appliances, thereby increasing domestic electricity demand, he argued.
Domestic Consumption Must Increase Alongside Exports
IPPAN has also emphasized that a large share of Nepal’s electricity should be consumed domestically, with the surplus exported.
Dangi cited the example of the NEA earning Rs. 2.931 billion from exporting around 1,200 MW of electricity in fiscal year 2025/26, saying electricity exports could become a major source of revenue in the future.
According to him, if Nepal reaches the capacity to export up to 15,000 MW of electricity, the country could generate substantial foreign-exchange earnings. Likewise, if the same amount of electricity were consumed domestically, per-capita electricity consumption would increase significantly and contribute to expanding the size of the economy, he said.
Private Sector Should Enter Trading After Generation and Transmission
Dangi said the private sector has developed significant electricity-generation capacity over the past two decades and should now be allowed to participate in transmission and electricity trading as well.
According to him, private companies have demonstrated their technical capabilities by constructing transmission lines of various capacities, connecting their projects to NEA substations. Therefore, he called for the private sector to be granted licenses not only for electricity generation but also for transmission-line construction.
The IPPAN president said private-sector participation in Nepal’s energy sector began institutionally after PPA rates were determined in 2055 BS. Over the past 25–26 years, he said, the private sector has significantly expanded its technical and financial capacity.
According to him, private developers that initially built 1–2 MW projects are now capable of developing projects with capacities of hundreds of megawatts. Given this capacity, the private sector should now be involved in all three areas—electricity generation, transmission and trading, he argued.
Dangi said the government’s target of generating 30,000 MW within 10 years cannot be achieved by continuing with conventional approaches. Both the NEA and the private sector need to fundamentally change the way they operate, he said.
“We are spending time thinking about how not to sign PPAs, how not to extend the RCOD, and how to operate power plants at lower capacity. Therefore, we need to change our traditional way of working to achieve the government’s target,” he said.
IPPAN has been arguing that, given the private sector’s substantial investment in electricity generation, the sector must now be allowed to advance alongside expanded markets, transmission infrastructure and electricity-trading rights. Dangi’s latest remarks also indicate that private power producers’ future push will extend beyond PPAs to securing a larger role for the private sector in Nepal’s overall electricity market structure.
Jalasarokar