Kathmandu — The Nepal Electricity Authority (NEA) purchased 10,825 gigawatt-hours (GWh) of electricity—equivalent to 10.825 billion units—from private-sector power producers in fiscal year 2025/26. The volume of electricity purchased from private producers increased by 25.78 percent compared with the previous fiscal year. For this electricity, the NEA paid private producers more than Rs. 67.68 billion.
According to a report presented today by NEA Managing Director Dighayu Kumar Shrestha, the authority had purchased 8,609 GWh of electricity from private producers in fiscal year 2024/25. Thus, electricity purchased from the private sector increased by 2,216 GWh in a single year.
This indicates that the NEA’s dependence on private-sector generation within Nepal’s electricity system is continuing to grow. Of the 18,624 GWh of total energy available in the NEA system in FY 2025/26, private producers alone supplied 10,825 GWh—around 58 percent of total available energy.
In other words, of every 100 units of electricity currently available in Nepal’s power system, around 58 units come from private-sector projects.
Private-Sector Electricity More Than Three Times NEA’s Own Generation
The structure of electricity availability also highlights the NEA’s changing role. In FY 2025/26, the NEA generated 2,803 GWh from its own projects. In comparison, it purchased 10,825 GWh from private producers.
This means the volume of electricity purchased from the private sector was approximately 3.86 times higher than the NEA’s own generation.
When the 3,826 GWh of electricity received from NEA subsidiary companies is also included, the share of electricity entering the system from projects outside the NEA itself becomes even larger.
This reflects the structural transformation taking place in Nepal’s electricity sector in recent years. While the NEA historically carried the primary responsibility for electricity generation, it has increasingly become an institution that purchases large volumes of electricity from private producers and sells it to consumers.
NEA Spends More Than Rs. 96 Billion on Electricity Purchases
In addition to spending Rs. 67.68 billion on electricity purchased from private producers, the NEA spent Rs. 17.86 billion purchasing electricity from its subsidiary companies and Rs. 10.56 billion purchasing electricity from India.
As a result, the NEA’s total expenditure on electricity purchased from private producers, subsidiary companies and India exceeded Rs. 96.10 billion.
This amount is also substantial compared with the NEA’s total electricity sales revenue of Rs. 148.62 billion. This shows that the cost of purchasing electricity has become one of the most significant expenses in the NEA’s electricity business.
However, there is an important aspect to consider. Although the volume of electricity purchased increased by more than 19 percent, the average electricity purchase rate declined from Rs. 6.11 per unit in the previous year to Rs. 6.07 per unit.
This means the increase in total purchasing costs was not driven by the NEA purchasing electricity at significantly higher rates. Rather, the overall cost increased primarily because the volume of electricity purchased rose substantially.
PPAs With Private Producers Increasing Future Purchase Obligations
The NEA currently has power purchase agreements (PPAs) with 545 private-sector power projects, with their total contracted capacity reaching 12,135 MW.
This means that in addition to the electricity currently being supplied by private-sector projects, the volume of electricity the NEA will be required to purchase from private producers in the coming years is also likely to increase significantly.
In FY 2025/26 alone, the NEA signed PPAs with 54 projects. Of these, five were hydropower projects with a combined capacity of 28.6 MW, while 49 were solar projects with a combined capacity of 675 MW.
This indicates that the NEA’s electricity procurement structure is likely to expand further in the coming years.
At the same time, an important question arises for the NEA’s financial management: With PPAs already signed for more than 12,000 MW, how will the authority manage the market, transmission infrastructure and purchase obligations associated with electricity generated by these projects?
Is Rising Private-Sector Generation an Opportunity or a Liability for the NEA?
The growth of private-sector electricity generation is a positive development from the perspective of Nepal’s energy sector. The country has been able to develop thousands of megawatts of generation capacity through private capital without requiring massive public investment. This has not only increased domestic electricity generation but has also expanded the foundation for electricity exports to India.
However, from the NEA’s perspective, PPAs signed with private producers also represent long-term financial obligations. The authority is obligated to purchase electricity generated by contracted projects. Therefore, as PPA capacity continues to grow, maintaining a balance among generation, transmission capacity and electricity markets is becoming equally important for the NEA.
With electricity purchased from the private sector already accounting for around 58 percent of total available energy, this share could increase further in the coming years.
Therefore, the question is no longer limited to “How many megawatts of electricity will Nepal generate?” It is also about “Who will purchase the electricity generated, at what price, where will it be consumed, and who will bear the long-term financial burden?”
The NEA’s latest figures indicate that Nepal’s electricity sector is gradually moving beyond a phase of insufficient generation and entering a new phase focused on market development, transmission capacity and electricity procurement management.
Along with this transformation, the NEA’s role is also changing—from an institution primarily responsible for generating electricity itself to one that increasingly purchases, manages and sells large volumes of electricity generated by the private sector.
Jalasarokar