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Minister for Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, has stated that Nepal’s energy sector has now entered a decisive phase of transformation. He said the government aims to develop the energy sector as a key foundation for economic transformation by integrating power generation, energy trade, transmission infrastructure, and industrialization.

Addressing the 24th Annual General Meeting of the Independent Power Producers' Association Nepal (IPPAN), he said that the energy sector is currently undergoing structural transformation. He noted that the government has, for the first time, placed transmission lines among its highest priorities, viewing them as the backbone of electricity supply. According to him, the goal is to complete more than a dozen strategic transmission lines within the coming year.

Minister Shrestha further stated that the government’s policy is to liberalize energy trade and allow the private sector to participate in electricity trading in international markets. He also mentioned plans to involve private investment in transmission lines and develop a commercial framework through a wheeling charge system.

The minister said that the government plans to implement a “take-or-pay” model in Power Purchase Agreements (PPAs), reopen PPAs for projects with capacities below 10 MW, and encourage private investment in reservoir-based hydropower projects. He added that the government has initiated legal amendments to remove forestry and environmental barriers. Environmental Impact Assessment (EIA) procedures, tree-felling approvals, and land-use rights processes will also be simplified. While reaffirming the government’s commitment to making the energy sector investment-friendly, he warned that the government would be strict against practices such as project hoarding and unnecessary delays.

Structural Problems Remain Serious

Speaking at the event, IPPAN President Ganesh Karki highlighted the historic transformation achieved in Nepal’s energy sector over the past 26 years through active private-sector participation.

According to Karki, 187 projects with a combined capacity of 5,792 MW are currently under construction, while 134 projects totaling 2,862 MW have signed PPAs and are in the financial closure stage.

Data from the Department of Electricity Development show that 380 projects with a total capacity of 25,743 MW are at various stages of development. In addition, the private sector holds licenses for 915 projects with a combined capacity of 34,377 MW.

Karki pointed out that structural challenges remain a serious obstacle to energy-sector development. He said that developers must coordinate with 14 ministries, dozens of departments, and various regulatory agencies to move a single project forward. He identified procedural complexity, delays in approvals, and lack of coordination as the major challenges.

Expansion of Productive Industries Needed

At the program, Birendra Raj Pandey, President of the Confederation of Nepalese Industries (CNI), emphasized that expanding productive industries is essential to increase domestic electricity consumption.

He stated that higher domestic demand will be necessary to achieve the target of producing 30,000 MW of electricity within the next decade.

“To increase electricity consumption, productive industries are necessary,” he said.

Pandey welcomed the government’s policy initiatives to allow private-sector participation in electricity trading and transmission-line construction. He stressed that greater coordination among policy, institutional structures, and implementation is needed, given the important role of the private sector in expanding investment in the energy sector. He also urged the immediate restructuring of the Nepal Electricity Authority.

Private Sector Participation in Trade and Transmission

Also speaking at the event, acting Executive Director of the Nepal Electricity Authority, Dirghayu Kumar Shrestha, expressed support for allowing private-sector participation in electricity trading and transmission-line development.

He stated that the private sector would play a decisive role in achieving the government’s target of exporting 15,000 MW of electricity. He further emphasized that close cooperation between the public and private sectors is essential for the rapid development of Nepal’s energy sector.