Kathmandu — Nepal has achieved notable success in electricity generation over the past decade. Compared to the total capacity expansion made during the first century since power generation began in the country, electricity production capacity has grown nearly sixfold within a much shorter period.
According to Nepal’s Current Economic Status Report made public by the Ministry of Finance on Monday, the country’s total installed electricity capacity stood at only 697.85 megawatts as of mid-July 2011. By mid-March 2026, that figure had risen to 4,105 megawatts, adding fresh momentum to Nepal’s energy sector.
Stakeholders say the key driver behind the sharp increase in power generation over the past decade has been investment from the private sector.
Prakash Chandra Dulal, Deputy General Secretary of the Independent Power Producers’ Association Nepal (IPPAN), said most of the credit for this progress should go to private investors. He claimed the private sector accounts for 84 percent of the growth.
However, the Electricity Regulatory Commission stated in its annual report released last December that by fiscal year 2024/25, the private sector’s share of electricity production had reached 55 percent. The report added that the Nepal Electricity Authority and its subsidiary companies account for 34 percent, while the remaining 11 percent is imported from India.
Rejecting the commission’s figures, Dulal argued the data was inaccurate. He said that according to the Nepal Electricity Authority’s own annual report, the authority’s directly owned projects generate only around 700 megawatts. Including subsidiaries such as Upper Tamakoshi and Chilime, the government side produces no more than 1,200 megawatts, while over 3,000 megawatts come from the private sector.
Dulal further argued that projects built under company models also include investment from the public and private sectors, meaning they cannot be classified as purely government-owned. On that basis, he said the private sector’s effective share is close to 84 percent.
Nepal has now become a net annual exporter of electricity. However, due to the dominance of run-of-river hydropower projects, the country still needs to import electricity from India during the dry season to meet domestic demand.
The report noted that while surplus power is exported during the monsoon season, production falls in winter, forcing Nepal to rely on imports and raising concerns about long-term energy security.
As domestic production—largely from private sector projects—continues to rise, Nepal’s dependence on India for electricity supply has gradually declined. Nepal has also been exporting electricity to India since 2020. Still, imports continue during winter when river-based generation drops.
According to the regulatory commission, the share of imported electricity in Nepal’s total supply fell from 14.82 percent in fiscal year 2022/23 to 11 percent in the last fiscal year.
Commission spokesperson Nabin Raj Singh said growing private investment in hydropower has significantly increased private sector contributions to generation.
“In recent years, banks and financial institutions have expanded lending to hydropower projects, and the impact is now visible in electricity production,” Singh said. He added that public investment in hydropower has also risen.
He noted that while the Nepal Electricity Authority has focused on large-scale projects that take longer to complete, private sector projects are generally completed faster.
Transmission bottlenecks remain a major challenge
Despite strong growth in generation, inadequate physical infrastructure remains a key obstacle in delivering electricity to consumers. Limited transmission line reach and capacity have made it difficult to connect privately generated electricity to the national grid and distribute it efficiently.
Many hydropower projects are under construction, but delays in transmission line development have increased risks to both projects and investments. Dulal said that if transmission lines had been completed on time, Nepal’s installed capacity would already have exceeded 4,400 megawatts.
“Projects are failing to finish on schedule mainly because transmission lines are not ready,” he said, adding that the Nepal Electricity Authority has also acknowledged the issue.
Recently, the authority issued a notice extending commercial operation deadlines for several projects due to the lack of transmission infrastructure.
New strategy needed for energy security
To boost electricity consumption and narrow the gap between demand and supply, Nepal now needs to revise its strategy. Government agencies and stakeholders have stressed the need to prioritize reservoir-based hydropower and solar energy projects.
Reservoir-based plants can help meet winter demand, while solar energy can improve the country’s energy mix and make the power system more reliable.
Aarthik abhiyan
