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The government has unveiled a set of incentives aimed at accelerating investment in reservoir-based hydropower, offering developers an unusual early advantage: permission to float up to 40 percent of shares through an initial public offering (IPO) in the very first year of operation.

Announcing the provision while presenting the budget for fiscal year 2083/84 in Parliament on Friday, Finance Minister Dr. Swarnim Wagle said the move is designed to draw in private capital and strengthen long-term electricity generation capacity.

Reservoir-based projects, which store water and generate power as needed, are being prioritised as Nepal seeks to address the seasonal fluctuations that plague its largely run-of-river hydropower system. Winter months typically see reduced generation due to lower river flows, creating supply instability.

Officials argue that expanding storage-based projects would help ensure a more consistent year-round power supply while also enabling greater energy security.

Under the new arrangement, hydropower developers will be allowed to issue IPOs at an early stage of project development, a shift intended to ease the heavy upfront financing burden associated with large infrastructure projects. The government expects the provision to broaden public participation in energy investments as well.

Alongside the IPO measure, the budget also promises legal and policy facilitation for reservoir projects, as part of a broader push to expand generation, transmission, and distribution infrastructure. It also reiterates plans to boost private sector participation, increase electricity exports, and expand domestic consumption of hydropower.