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Excessive focus on hydropower sector alone may not help boost economic growth: MPs

Lawmakers have called on the government to intervene in diversifying private sector investment, warning that excessive focus on hydropower alone may not deliver sustainable economic growth.

Speaking at a meeting of the parliamentary Infrastructure Development Committee on Monday, members stressed the need for government facilitation to channel private capital into demand-driven and priority sectors. “The private sector must be pushed to invest in need-based areas rather than duplicating projects,” said Purna Bahadur Limbu of the Shram Sanskriti Party.

Limbu noted that nearly 72 percent of private investment is concentrated in hydropower. He urged for balanced and regulated investment in villages and remote areas to ensure mutual benefits for both the government and private sector.

Deepak Kumar Sah of the Rastriya Swatantra Party (RSP) criticized the low returns for the public from hydropower projects, pointing out discrepancies in reported production costs. “While the average cost has reached Rs 220 million per megawatt, investors disclose only Rs 170 million per MW. This raises suspicion that funds are being diverted to other sectors,” Sah said. He added that of more than 120 hydropower projects currently in operation, only around 21 have provided returns to shareholders.

RSP lawmaker Raju Nath Pandey questioned the reluctance of private investors to finance road networks and waste management projects, despite their potential for higher returns. He highlighted policy bottlenecks, noting that several proposals remain stalled at Investment Board Nepal.

Asha Jha of the ruling party emphasized that investment safety must be guaranteed before the private sector can be attracted to infrastructure projects beyond hydropower.

Lawmakers further identified systemic issues such as the absence of a one-door approval mechanism, lack of a dedicated oversight agency for public-private partnerships, bureaucratic hurdles, and neglect of agriculture and manufacturing sectors as key barriers to diversifying private sector investment.