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The government says it has made significant progress under its 100-point governance reform agenda by prioritizing the energy sector as a key driver of Nepal’s economic transformation. The Ministry of Energy, Water Resources and Irrigation has prepared an energy export strategy while advancing reforms in hydropower development, transmission infrastructure, cross-border electricity trade, and irrigation projects.

According to the ministry, the Energy Consumption Growth and Export Strategy 2026/27 has been finalized. The strategy aims to increase domestic electricity consumption by replacing LPG with electricity, expanding the use of electric vehicles, promoting electricity over fossil fuels in industries, and prioritizing electricity exports. It also targets exporting electricity through cross-border transmission lines during evening peak hours, when export prices are higher.

Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha said the ministry has formed separate task forces to review the Power Purchase Agreement (PPA) process, licenses issued by the Department of Electricity Development (DoED), and broader policy reforms in the energy sector. These task forces have prepared reform roadmaps to improve sector governance.

Based on their recommendations, the government has initiated the process of canceling licenses for 38 hydropower projects with a combined capacity of 1,388 MW that have shown no progress for an extended period. The ministry has also adopted a policy of prioritizing projects that demonstrate progress, taking action against stalled projects, and ending the long-criticized “license raj” by issuing future licenses through a competitive process.

The government has set a target of completing 12 transmission line projects during the upcoming fiscal year. Construction will be accelerated on the Hetauda–Dhalkebar–Inaruwa, New Khimti–Barhabise–Kathmandu, and Hetauda–Ratmate–Lapsiphedi–New Damauli–New Butwal 400 kV transmission lines. The ministry also plans to expand cross-border electricity trade through the Butwal–Gorakhpur, Inaruwa–Purnia, Dhalkebar–Muzaffarpur–Sitamarhi, Lamahi–Lucknow, and Chilime Hub–Kerung transmission corridors.

For the upcoming fiscal year, the government has allocated Rs. 85.54 billion for electricity generation, transmission, and distribution infrastructure. Of this, Rs. 70 billion has been earmarked specifically for under-construction transmission lines and substations.

The Rahughat Hydropower Project is scheduled for completion within the current fiscal year, while construction will be accelerated on the Tanahun Storage Hydropower Project, Upper Modi, Upper Trishuli-3B, and Budhiganga Hydropower Project. Financial closure and tender processes will also move forward for the Upper Arun, Uttarganga, Chainpur Seti, Tamakoshi-5, and Ghunsa Khola hydropower projects.

The government has also begun the process of restructuring the Nepal Electricity Authority (NEA) into three separate companies responsible for electricity generation, transmission, and distribution/trading. In addition, it plans to install a 100 MW Battery Energy Storage System (BESS) in the Kathmandu Valley and increase Nepal’s total installed electricity generation capacity to 5,535 MW by the end of the next fiscal year.

As part of governance reforms, the ministry has activated its 1151 round-the-clock grievance response service and established a dedicated governance unit to strengthen public service delivery, performance evaluation, and monitoring systems.

In the irrigation sector, the ministry has already invited international bids for the construction of the dam and powerhouse of the Sunkoshi–Marin Diversion Project. It also stated that contractors and project chiefs have been assigned greater responsibility to accelerate delayed projects, including the Bheri–Babai Diversion Project.

Jalasarokar