Kathmandu: Nepal’s private hydropower sector has urged the government to announce a special legal, financial, administrative, and regulatory package to support the reconstruction and rehabilitation of hydropower projects damaged by the devastating Bhote Koshi floods.
A delegation led by Mohan Kumar Dangi, president of the Independent Power Producers’ Association, Nepal (IPPAN), along with representatives of affected hydropower projects, met Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha on Wednesday to present the demands.
IPPAN has proposed that projects affected by the Bhote Koshi disaster be officially designated as “Special Flood-Affected Hydropower Projects” and be provided with reconstruction and rehabilitation measures outside the normal regulatory framework.
Call for High-Level Reconstruction Committee
To accelerate recovery efforts, IPPAN has proposed the formation of a Bhote Koshi Hydropower Reconstruction Steering Committee chaired by the Prime Minister. The proposed committee would include representatives from the ministries of energy, finance, land management, forests and environment, as well as the Department of Electricity Development, Nepal Electricity Authority (NEA), Electricity Regulatory Commission (ERC), Nepal Rastra Bank, Nepal Insurance Authority, National Disaster Risk Reduction and Management Authority, banks and financial institutions, and IPPAN.
The association has also called for a dedicated reconstruction task force under the Ministry of Energy and the immediate issuance of a Special Hydropower Reconstruction and Rehabilitation Procedure, 2026.
IPPAN stressed the need for an urgent assessment of actual damages, categorizing losses into complete destruction, severe damage, partial damage, access and transmission disruptions, and indirect losses resulting from halted power generation.
Relief Measures for Operational Projects
For projects that were operational before the disaster but have since stopped generating electricity, IPPAN has proposed special relief for the outage period, extensions of Power Purchase Agreement (PPA) terms, and revisions to PPA tariffs where necessary.
The association has also sought:
- A 3–5 year moratorium on principal and interest payments on bank loans;
- Interest concessions or capitalization of interest into loan balances;
- Immediate settlement of insurance claims;
- Tax and customs exemptions on reconstruction equipment and materials;
- Suspension of royalty and regulatory fee payments until reconstruction is completed;
- Access to concessional financing.
IPPAN further proposed grants through a Viability Gap Fund (VGF) for projects that had completed more than 90 percent of construction and were in the testing phase.
The association requested a separate special package for the 20 MW Langtang Khola Hydropower Project, which had completed dry testing and was preparing to begin commercial operation on September 1 before being affected by the floods.
Support for Under-Construction Projects
For projects still under construction, IPPAN has proposed extensions to project completion deadlines and PPA terms, restructuring of financial arrangements, suspension of construction loan repayments, and support in raising additional debt and equity financing.
The association also requested tax and customs exemptions on construction materials, foreign currency exchange facilities, support for mobilizing contractors and equipment, expedited environmental and forest approvals, and government assistance in rebuilding access roads and transmission infrastructure.
Projects in the pre-construction and study stages should also be covered by relief measures, IPPAN said, including extensions to survey licenses and permits and flexibility to alter project locations and transmission routes when necessary.
One-Stop Service for Reconstruction Approvals
IPPAN has proposed the establishment of a Bhote Koshi Hydropower Reconstruction One-Window Center to streamline approvals and eliminate the need to seek separate permissions from multiple government agencies.
The association also called for simplified and fast-track approval processes for changes to water intake structures, powerhouses, tunnels, transmission lines, access roads, and project designs necessitated by reconstruction.
For environmental and forestry procedures, IPPAN suggested allowing damaged infrastructure to be rebuilt, relocated, or modified based on previously approved environmental studies, with expedited approvals for river-control works and access-road improvements.
Proposal for Special Reconstruction Fund
IPPAN has proposed the creation of a dedicated reconstruction fund to finance the recovery of affected projects. The fund could mobilize resources from the government, development partners, concessional loans, climate finance mechanisms, donor agencies, insurance payouts, and private-sector contributions.
The association also called for minimal or zero customs duties and taxes on turbines, generators, transformers, pipes, and other equipment used in reconstruction. It further proposed allowing reconstruction expenses to be deducted from taxable income.
In addition, IPPAN urged Nepal Rastra Bank to introduce special banking facilities, including repayment moratoriums, loan-tenor extensions, refinancing schemes, and concessional interest rates for affected projects.
Priority for Transmission Infrastructure
IPPAN noted that significant damage to transmission infrastructure in the Bhote Koshi corridor could hinder power generation and evacuation even after projects are rebuilt.
The association therefore urged the government to treat transmission reconstruction as a national priority and proposed special power-purchase and payment arrangements—or extensions of PPA terms—for periods when projects are unable to generate due to transmission disruptions.
It also requested technical teams to support the installation of temporary transmission facilities and the reinstallation of damaged equipment.
Focus on Climate Risk Reduction
Beyond hydropower facilities, IPPAN called for an integrated disaster risk assessment covering roads, bridges, settlements, and transmission infrastructure throughout the Bhote Koshi region.
The association proposed mapping future risks from floods, landslides, debris flows, and glacial lake outburst floods (GLOFs), while developing early-warning systems and long-term disaster risk reduction strategies.
Energy Minister Signals Special Relief Package
Responding to IPPAN’s proposals, Energy Minister Biraj Bhakta Shrestha said the government is preparing a special relief package for flood-affected hydropower projects.
He said the government aims to ensure that hydropower developers remain encouraged to invest in the sector and that Nepal continues to maintain a favorable investment climate.
According to the minister, discussions are underway on forming a River Corridor Authority, revising hydropower design standards to improve safety, and introducing a special package to facilitate the reconstruction and rehabilitation of affected projects.
Ganesh Karki, advisor to the minister and former IPPAN president, said the government is also moving forward with plans to allow private-sector participation in electricity trading and transmission line development.
Nepalpurbadhar
