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A high-level committee formed to review the current status, progress, and effectiveness of hydropower project licenses issued by the Department of Electricity Development submitted its report on Tuesday to Minister for Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha. The committee recommended extensive policy, legal, and structural reforms to the licensing system.

Receiving the report, Minister Shrestha stated that the recommendations would undergo legal and technical evaluation and be implemented promptly.

In accordance with Point 74(b) of the Cabinet’s 100-point Governance Reform Action Plan, a five-member high-level committee was formed on April 1 (Chaitra 19) under the coordination of Joint Secretary Mohan Shakya of the Ministry of Energy, Water Resources and Irrigation. The committee included Dr. Diwas Bahadur Basnyat, Nikunj Bhandari, Shaligram Bhandari, and Jeevan Ranamagar as members.

The committee conducted a detailed study of the status and progress of licenses issued to date and identified policy, technical, economic, and legal weaknesses in the licensing process. Based on its findings, it submitted recommendations for improvement to the ministry.

The committee recommended initiating the cancellation process for licenses held by developers who have failed to advance construction work for a prolonged period even after completing Power Purchase Agreements (PPAs). According to the Energy Minister’s Secretariat, the report proposes several policy reforms aimed at making the licensing system more transparent, competitive, and aligned with national interests.

The committee also pointed out the need to review conflicting and ambiguous provisions in the Electricity Act, 1992, Electricity Regulations, 1993, Hydropower Development Policy, 2001, and licensing-related directives, and to ensure consistency through necessary legal amendments.

Similarly, it recommended eliminating overlaps in jurisdiction among the Investment Board, the Ministry of Industry, and the Ministry of Energy regarding project licensing and investment approvals, and clearly defining responsibilities.

The report further states that important matters such as license amendments, management of the project bank, and the sale or transfer of licenses should be incorporated into regulations rather than being governed solely by directives. The committee also emphasized the need to clarify existing ambiguities regarding ownership transfer, operational management, and revenue collection after the expiration of generation licenses, ensuring that future legal arrangements serve national interests.

The committee recommended replacing the current “first come, first served” licensing approach with a competitive bidding system. It also proposed enacting a new Electricity Act that clearly defines provisions related to electricity trade and delineates the jurisdictions of federal, provincial, and local governments.

In addition, the committee suggested preparing a National Electricity Development Plan, including a transmission line master plan, an electricity demand master plan, and a least-cost power generation plan.

Furthermore, it recommended introducing legal provisions requiring environmental approvals and Environmental Impact Assessment (EIA) processes related to forests, conservation areas, national parks, buffer zones, and similar sectors to be completed within 12 months.

To address obstacles in land acquisition, the use of forest areas, and the supply and use of explosives for hydropower projects, the committee also recommended introducing a “sunset law” and establishing a one-stop service system through which all project-related permits and approvals can be obtained.