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The government has estimated to generate an additional 1,040 MW of electricity in the next Fiscal Year (FY), taking the country’s total installed capacity to 5,535 MW.

Through the budget for FY 2026/27, the government has forwarded the plan to connect over 1,000 MW of additional electricity to the national grid. This includes 670 MW electricity generated from hydropower projects and 370 MW from solar energy.

Under the plan, the government seeks to complete construction of the 40 MW Rahughat Hydropower Project within the stipulated time period. For this purpose, the government has allocated a budget of Rs 85.54 billion for electricity generation, transmission, and distribution infrastructure.

Likewise, the government plans to expedite ongoing works on major projects including the Tanahun Reservoir-based Hydropower Project along with run-of-river based Upper Modi A, Upper Modi, Upper Trishuli-3B, and Budhiganga hydropower projects.

In addition, the projects including the 1,061 MW Upper Arun, 828 MW Uttar Ganga, 210 MW Chainpur Seti, 99 MW Tamakoshi-5, and 77 MW Ghunsa Khola hydropower are in the pipeline. “For these large-scale hydropower projects, financial arrangements and bidding processes will be initiated soon,” reads the budget document.

The budget proposes to advance the study for projects such as the 417 MW Nalgadh, 490 MW Arun-4, and 281 MW Naumure projects. Similarly, construction bidding will be initiated for the 439 MW Betan Karnali Hydropower Project, which will involve investment participation from contributors of the Employee Provident Fund.

The government says it will also facilitate developing projects with a capacity totalling 3,000 MW, which include the 900 MW Arun III and the 669 MW Lower Arun. For transmission infrastructure, Rs 70 billion has been allocated to complete ongoing transmission lines and substations.

The construction of the 1,200 MW Budhi Gandaki reservoir-based project, which is advancing at a snail’s pace, will also be expedited. The government has promised to begin the contracting process in the next FY.

The Hetauda–Dhalkebar–Inaruwa 400 kV transmission line is expected to be completed within the current FY. The construction of new 400 kV lines, including Khimti–Barhabise–Kathmandu and Hetauda–Ratemate–Lapsiphedi–New Damauli–New Butwal corridors, will also be expedited.

Cross-border transmission projects such as Butwal–Gorakhpur, Inaruwa–Purnia, Dhalkebar–Muzaffarpur–Sitamarhi, Lamki–Dododhara–Bareilly, Lamahi–Lucknow, Nijgadh–Motihari, and Chilime Hub–Kerung are also expected to be taken forward.

The government plans to accelerate the Karnali corridor national transmission line and expand electrification in Karnali Province’s off-grid local levels.

As per the Rastriya Swatantra Party government’s new energy initiatives, a 2.5 MW green hydrogen pilot plant will be implemented in Hetauda for commercial production, while a 100 MW battery energy storage system will be introduced in Kathmandu Valley to address peak-hour electricity shortages.

To generate necessary financial resources for energy projects, the budget talks about issuing green energy bonds and diaspora bonds. The private sector will be encouraged to invest in large-scale and reservoir-based hydropower projects.

Reservoir-based projects that secure 100 percent investment financing will be allowed to issue up to 40 percent of their IPO in the first year itself. In addition, the government has also planned to generate funds out of the five percent value added tax imposed on the electricity consumption base.