The government is under pressure due to its ‘take-and-pay’ policy announced in the budget for the next fiscal year (FY), with stakeholders from various fronts expressing dissatisfaction over the government’s new move.

The rift has surfaced even within the government. While Energy Minister Deepak Khadka is on the side of revising the policy announced in the budget, Finance Minister Bishnu Prasad Paudel has been reluctant to back Minister Khadka. Although the Energy Ministry has already sent a letter to correct the provision, the Ministry of Finance has not taken any action over the issue so far.

Speaking at a program organized in the capital on Monday, the majority of stakeholders slammed the government’s new policy in energy business. Ganesh Karki, president of the Independent Power Producers Association of Nepal (IPPAN), said that the take-and-pay provision if implemented will risk an investment of Rs 109 billion in the hydropower sector while discouraging probable investment of Rs 3.314 trillion in pipeline projects.

Prakash Dulal, general secretary of the IPPAN, said the power purchase agreement (PPA) of 17,117 MW pipeline projects will be halted if the government enforces the take-and-pay policy. “As it will adversely affect the safe investment environment, banks are most likely to be reluctant to invest in such PPAs,” said Dulal.

In the annual budget announced on May 29, the government introduced the condition that the electricity generators can carry out PPA with the Nepal Electricity Authority (NEA) only on the basis of take-and-pay. The condition requires that electricity generated by private producers will be purchased by the NEA only when there is demand.

Lawmakers have also criticized the government's new policy of take-and-pay for the hydropower producers. Lawmaker Deepak Bahadur Singh, who is also the chairperson of the parliamentary Infrastructure Development Committee, stressed the need for amendment to the clause of the budget to protect the energy businesses of the country. Lawmaker Bina Lama urged the government to discuss with stakeholders regarding revision of the take-and-pay provision.

Govinda Raj Pokharel, former vice-chairperson of the National Planning Commission, said the government policy is likely to adversely affect one of the main job providing sectors. “Lack of policy clarity could take the sector to a crisis.”

Meanwhile, Nepali Congress President Sher Bahadur Deuba is said to have expressed his dissatisfaction over the mandatory take-and-pay policy forwarded by the government. According to a source, Deuba on Monday even called Finance Minister Paudel to remove the clause from the budget document before passing the annual budget of 2025/26 from the parliament.