While emphasizing that the government remains "private-sector friendly," Minister Shrestha warned that the state will now be ruthless in enforcing good governance, ending the "license power," and penalizing investors who hoard project licenses without executing construction.
- Major Policy Incentives for Reservoir & Private Projects
To accelerate energy production and attract heavy capital, the government is rolling out unprecedented financial and licensing relaxations:
- Reservoir-Based Project Boost: For reservoir projects with 100% secured investment, companies will be permitted to issue up to 40% of their Initial Public Offering (IPO) within the very first year. Additionally, their operational license period will be extended to 50 years.
- Take-or-Pay PPA Model: New Power Purchase Agreements (PPAs) will strictly follow the "take-or-pay" model, guaranteeing that the state will pay for the contracted energy whether it is consumed or not.
- Support for Small Hydropower: PPAs have been immediately opened for smaller projects (under 10 MW) to protect and encourage small and medium enterprise (SME) investments.
- Market Liberalization & Financial Innovation
The government plans to dismantle older monopolies by legalizing private cross-border trading and introducing new financial instruments:
- International Power Trading: The private sector will soon be legally permitted to trade electricity directly in the international market.
- Private Transmission Lines & Wheeling Charges: Provisions are being made to allow private entities to construct transmission lines and earn revenue by charging a "wheeling fee" for transmitting power, fostering a competitive market.
- Alternative Financing: To secure steady capital, the government will launch Clean Energy Bonds to attract green investments, alongside Diaspora Bonds tailored to tap into the capital of Non-Resident Nepalis (NRNs).
- Stable Lending: Frameworks are being designed to ensure banks offer stable, fixed interest rates for hydropower loans to safeguard long-term investments.
- Cutting Regulatory Red Tape (Forest & Environment)
Acknowledging that bureaucratic delays have plagued infrastructure, Minister Shrestha highlighted crucial amendments to the Forest Act, 2076 and Environment Protection Act, 2076:
- Streamlined Clearance: The complex, multi-tiered process for forest area clearance and tree-felling orders has been significantly shortened.
- No Supplementary EIAs: Under newly approved guidelines, developers will no longer be forced to undergo a tedious supplementary Environmental Impact Assessment (EIA) or Initial Environmental Examination (IEE) simply because of changes in the number of trees or specific forest acreage to be cleared.
- Fee Adjustments: Government fees associated with forest land use rights and tree felling during project handovers have been adjusted to lower the financial burden on developers.
- Unbundling the NEA & Cross-Border Power Corridors
The state is preparing for a complete structural overhaul of its power utility to maximize regional power trading.
Restructuring the Nepal Electricity Authority (NEA)
Preparations are officially underway for the unbundling of the NEA. Splitting its generation, transmission, and distribution arms will lay the groundwork for a highly efficient, competitive, and transparent domestic energy market.
High-Priority Inter-Country Transmission Lines
To facilitate massive power exports, the government has placed the expansion of cross-border transmission lines on high priority. Key projects include:
- Butwal–Gorakhpur
- Inaruwa–Purnia
- Dhalkebar–Muzaffarpur–Sitamadhi
- Lamki–Dododhara–Bareilly
- Lamahi–Lucknow
- Nijgadh–Motihari
- Chilime–Kerung (China border)
- Future Outlook: AI, Green Hydrogen, and Domestic Consumption
The Ministry is pivoting from a pure generation strategy to a combined consumption and export strategy:
- Surging Per Capita Consumption: Nepal's current per capita energy consumption stands at 450 kWh. The ministry has set an ambitious target to more than triple this figure to 1,500 kWh within the next 10 years through creative domestic consumption programs.
- Tech & Future Energy: The government is exploring synergies between clean energy, Artificial Intelligence (AI), and the digital services industry. Concurrently, a pilot Green Hydrogen Plant project is underway to establish the foundation for Nepal’s future clean-energy economy.
