The ruling coalition partners, Nepali Congress (NC) and CPN-UML, have agreed not to include either the 'Take-or-Pay' or 'Take-and-Pay' provisions in future power purchase agreements (PPAs).

Instead, PPAs will be based on actual electricity demand and consumption, according to sources familiar with the development. The government has also pledged to fully implement the Energy Development Roadmap 2024 and take additional steps to strengthen the power sector.

Nepal had previously adopted the 'Take-or-Pay' model, which obligated the Nepal Electricity Authority to pay for electricity regardless of whether it was used. This year’s federal budget introduced a shift to the 'Take-and-Pay' model, under which payments would be made only for consumed electricity. However, the new provision drew sharp criticism from energy stakeholders and political leaders.

NC President Sher Bahadur Deuba, leader of the main coalition partner, had also pressed the government to drop the 'Take-and-Pay' provision from the budget.