Kathmandu: A high-level committee formed to review hydropower project licenses issued by the Department of Electricity Development (DoED) has recommended that the government initiate the cancellation process for licenses of projects that have failed to move forward with construction.
Submitting its report to Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha on Tuesday, the committee concluded that extensive policy, legal, and structural reforms are needed in the hydropower licensing system.
Minister Shrestha thanked the committee for carrying out its responsibilities seriously and stated that the recommendations contained in the report would undergo legal and technical evaluation before being implemented without delay.
The five-member high-level committee was formed on 2nd April, under the government’s 100-point Governance Reform Action Plan, with Joint Secretary Mohan Shakya of the Ministry of Energy serving as coordinator. The committee included Dr. Diwas Bahadur Basnyat, Nikunj Bhandari, Shaligram Bhandari, and Jeevan Rana Magar as members.
According to the committee, it reviewed the status, progress, and effectiveness of licenses issued to date and identified policy, technical, financial, and legal shortcomings in the licensing process.
The report recommends initiating the cancellation of licenses, pursuant to Section 8 of the Electricity Act, 1992, for developers that have failed to advance construction works for extended periods even after signing Power Purchase Agreements (PPAs).
The committee also emphasized the need for legal reforms to make the licensing system more transparent, competitive, and aligned with national interests. It recommended harmonizing conflicting and ambiguous provisions in the Electricity Act, 1992, Electricity Regulations, 1993, Hydropower Development Policy, 2001, and licensing directives.
The report further noted the need to eliminate overlapping jurisdictions among the Investment Board Nepal (IBN), the Ministry of Industry, and the Ministry of Energy regarding hydropower licensing and investment approvals, and to establish clear institutional responsibilities.
The committee has also recommended replacing the existing “first come, first served” licensing model with a competitive bidding system. It additionally highlighted the need for a new Electricity Act that clearly defines the powers and responsibilities of federal, provincial, and local governments.
Among its other recommendations, the committee urged the government to prepare a National Electricity Development Plan, a Transmission Line Master Plan, a long-term electricity demand forecast, and a least-cost generation plan.
The report also calls for legal provisions requiring environmental approvals and Environmental Impact Assessment (EIA) processes related to forests, conservation areas, national parks, and buffer zones to be completed within a maximum period of 12 months.
Likewise, to address bottlenecks in land acquisition, forest land utilization, and the supply and use of explosives for hydropower projects, the committee recommended introducing a “sunset law” and establishing a one-stop service mechanism for all permits and approvals.
According to the ministry, the report presents significant long-term reform measures aimed at making Nepal’s hydropower licensing system more organized, transparent, and investment-friendly.
Jalasarokar
