Kathmandu, July 14: Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha has said the government will review the status of hydropower projects that have obtained licences but have remained inactive for years and take appropriate action based on their progress.
Speaking at a programme held on Monday to welcome the newly elected executive committee of the Independent Power Producers’ Association, Nepal (IPPAN), Minister Shrestha said the government would fully support genuine investors while discouraging the practice of obtaining project licences without advancing construction.
He said the government would no longer tolerate promoters holding licences without making meaningful progress and urged IPPAN not to protect such practices.
“The government will classify stalled projects according to their status and take necessary decisions accordingly,” he said.
Policy reforms and private sector participation
Minister Shrestha said issues in the energy sector should be addressed according to their nature and priority rather than through a one-size-fits-all approach.
He stressed the need to introduce the necessary regulations and directives alongside the new Electricity Act to eliminate policy uncertainty and create a more predictable investment environment.
The minister also said the government is preparing to expand private sector participation in electricity trading, adding that private investment should not be limited to power generation but should also extend to electricity marketing, increasing domestic power consumption, and the development of transmission and distribution infrastructure.
He highlighted the need for a National Transmission Line Master Plan to avoid duplication of investment and improve long-term planning for transmission infrastructure. Noting that climate change is altering hydropower generation patterns, Shrestha said Nepal’s future energy planning should be based on an energy mix, rather than relying solely on hydropower.
Strengthening energy diplomacy
The minister said the government has proposed appointing an Energy Counsellor at the Nepali Embassy in India to facilitate electricity exports and strengthen Nepal’s energy diplomacy. He also expressed support for establishing a high-level coordination mechanism involving both the government and the private sector to resolve policy and implementation challenges facing the energy industry.
According to Shrestha, Nepal’s energy sector should be developed from the perspective of “economic engineering” by linking energy development with the country’s broader economic transformation through regular dialogue and cooperation between the government and private investors.
IPPAN submits 38-point reform proposal
During the programme, IPPAN submitted a 38-point proposal to the Ministry of Energy, Water Resources and Irrigation, outlining policy and structural reforms aimed at accelerating energy development.
Among the recommendations are:
- Granting electricity trading licences to private companies.
- Allowing private sector participation in transmission line construction.
- Making the new Electricity Act more investment-friendly.
- Developing shared transmission infrastructure.
- Extending project licence periods.
- Reforming the Power Purchase Agreement (PPA) system.
- Increasing domestic electricity consumption.
- Promoting green energy.
- Simplifying environmental approval procedures.
Private sector can deliver 30,000 MW: IPPAN
IPPAN President Mohan Dangi said Nepal’s target of generating 30,000 megawatts of electricity within the next 10 years could be achieved through private sector investment alone if the government provides an enabling policy environment.
He said delays in signing Power Purchase Agreements (PPAs), inadequate transmission infrastructure, failure to extend the Required Commercial Operation Date (RCOD) and licence cancellations have created uncertainty among investors.
Dangi urged the government to establish a high-level mechanism to address these issues, noting that developers cannot achieve financial closure without signed PPAs and that cancelling licences on this basis has undermined investor confidence.
He also clarified that IPPAN is committed to discouraging the unhealthy practice of companies issuing Initial Public Offerings (IPOs) and rights shares before commencing electricity generation, saying such practices weaken the credibility of Nepal’s hydropower sector. #nepal
