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Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha has stated that Nepal’s energy sector has entered a decisive phase of transformation and reiterated the government’s commitment to further expanding collaboration with the private sector.

Addressing the 24th Annual General Meeting and 8th Convention of the Independent Power Producers’ Association, Nepal (IPPAN), Minister Shrestha described the private sector’s contribution to the energy sector as historic. He emphasized that, beyond power generation, private-sector participation would also be expanded in electricity trade and transmission. Congratulating IPPAN on its 25-year journey of partnership with the government, he expressed confidence that its new leadership would further strengthen energy generation, trade, and transmission activities.

According to the minister, Nepal’s energy sector is currently undergoing structural transformation. He noted that the government has already begun implementing a 100-point action plan and a 32-point ministerial roadmap aimed at improving public service delivery. He added that the energy sector has been given significant priority in the national budget, with the goal of making it a key driver of economic transformation through an integrated approach to power generation, trade, transmission infrastructure, and industrialization.

Describing transmission lines as the backbone of electricity supply, Shrestha said the government has, for the first time, accorded them top priority. Around NPR 70 billion has been allocated for transmission infrastructure, with a target of completing more than a dozen strategic transmission line projects within the next year. He called this policy a potential “game changer” for the sector, stressing that energy development cannot progress without transmission expansion.

The minister also announced the government’s policy of liberalizing electricity trade, under which private companies will be allowed to participate in international power trading. Private investment will also be encouraged in transmission infrastructure, while a “dealing charge” mechanism will be introduced to develop a commercial framework for electricity trade. He said these measures are expected to increase competition and make the energy market more dynamic.

Shrestha further stated that the government plans to implement a “take-or-pay” model for Power Purchase Agreements (PPAs), reopen PPAs for projects with capacities below 10 MW, and encourage private investment in storage-type hydropower projects. He added that storage projects with 100 percent investment commitments would be allowed to issue up to 40 percent of their Initial Public Offering (IPO) in the first year, while project licenses could be extended up to 50 years.

To attract investment in the energy sector, the government plans to introduce clean energy bonds, diaspora bonds, and other green financing instruments. The minister also highlighted plans for fixed-interest loans for hydropower projects, integration of artificial intelligence and digital technologies into the energy sector, and the development of emerging technologies such as green hydrogen to build a clean energy economy.

Referring to legal complexities related to forests and the environment, Shrestha said the government has initiated amendments to relevant laws. Measures include simplifying the Environmental Impact Assessment (EIA) process and reducing procedural hurdles related to tree felling and land-use rights. He added that efforts are underway to address policy inconsistencies among the energy, forestry, environment, and infrastructure sectors.

The government aims to increase per capita electricity consumption from the current 450 units to 1,500 units within the next decade, he said. To achieve this, Nepal will simultaneously focus on boosting domestic consumption, promoting industrialization, and expanding electricity exports. He also noted that expanding power trade with India and Bangladesh remains a key priority.

The government has given high priority to several cross-border transmission line projects, including Butwal–Gorakhpur, Inaruwa–Purnea, Dhalkebar–Muzaffarpur, and Lamki–Bareilly. Reaffirming the government’s commitment to creating a private investment-friendly energy sector, Shrestha said genuine investors would continue to receive support, while those seeking to hold projects without implementation or causing unnecessary delays would face stricter measures.

Concluding his remarks, the minister said the government remains firmly committed to developing the energy sector as a cornerstone of Nepal’s economic transformation and extended his best wishes for the success of IPPAN’s annual general meeting.

Jalasarokar