Developers of hydropower projects in Nepal stand to benefit greatly after IPPAN recently revealed that total investment is expected to exceed Rs 3 trillion by 2035. According to IPPAN President Ganesh Karki, the private sector has already invested more than Rs 1.3 trillion in 725 energy projects with a combined capacity of 34,484 MW. While regulatory hurdles remain, investment plans from developers for the coming decade indicate that interest remains strong. Notably, private players now account for 81 percent of the country’s total electricity production—highlighting their crucial role in meeting Nepal’s energy goals. The country has undergone a massive transformation in electricity generation over the past 30 years. Generation capacity has increased from just 252 MW to 3,625 MW and is poised to grow further. If all current and planned projects are completed, installed capacity could reach 8,498 MW, with an additional 11,421 MW in the pipeline.
However, the optimistic outlook is tempered by concerns raised by Karki, who emphasized the government’s unfulfilled promises to streamline processes. Complicated legal frameworks, slow permitting, and poor inter-agency coordination continue to burden developers. Private sector confidence in Nepal’s hydropower potential remains high, driven by growing demand. Yet, major obstacles persist, including issues related to forest boundaries, land acquisition, and environmental compliance. Developers argue that what should be simple commercial or technical solutions often become prolonged bureaucratic battles. Calls for real simplification sound valid. There is also a growing need to integrate the entire power sector—generation, transmission, distribution, and trading—under a reformed vision. IPPAN, for instance, is seeking a more active role across the energy value chain. Allowing skilled private entities into these areas could ease pressure on state agencies, increase efficiency, and attract greater investment.
Nepal is now beginning to reap the benefits of electricity exports. Last year, the country exported electricity worth Rs 17 billion to neighboring countries, and the target this year is Rs 23 billion. Karki rightly points out, however, that the Nepal Electricity Authority (NEA) must also focus on boosting domestic consumption. While exports are valuable, developing a strong and stable internal market is essential for long-term project viability. If reliable and affordable electricity becomes widely accessible, the impact of hydropower projects will grow significantly. To sustain this momentum, the government must take concrete action. It should act as a reliable partner by easing rules on environmental and land use, ensuring timely payments from the NEA, and more. Meanwhile, ongoing disputes over Take-and-Pay and Take-or-Pay contracts continue to pose challenges, threatening revenue security for developers. Without dependable, stable frameworks, many developers struggle to secure financing. Addressing these persistent issues must be the government’s priority if Nepal is to scale up hydropower production. Private sector investment can shape Nepal’s energy future for the better—if the government is willing to plan wisely, act decisively, and work in genuine partnership.
Source: Republica
