Energy Minister Warns Against Idle Hydropower Licences, Promises Support for Genuine Investors
Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha has announced that the government will conduct a comprehensive review of hydropower projects that have remained inactive despite holding licenses for an extended period. Based on the findings, the projects will be categorized according to their progress, and necessary action will be taken.
The Minister made these remarks during a meeting with the newly elected office bearers of the Independent Power Producers' Association of Nepal (IPPAN) at the Ministry on Monday. He reiterated the government's commitment to supporting genuine investors while discouraging the practice of obtaining licenses without advancing project construction.
Minister Shrestha stressed that projects which fail to move forward despite securing licenses for years would no longer be tolerated. He also urged IPPAN not to encourage delays and emphasized that challenges in the energy sector would be addressed based on priority rather than through a blanket approach.
He added that policy-level inconsistencies should be resolved through the implementation of new laws, regulations, and directives to create a more efficient and transparent energy sector.
Highlighting the importance of private investment, Minister Shrestha said the government is committed to expanding the role of the private sector in electricity trading. He noted that private developers play a crucial role not only in power generation but also in market management, increasing electricity consumption, and strengthening transmission and distribution systems.
The Minister also underscored the need to promote an "energy mix" strategy as part of Nepal's long-term energy planning, particularly in response to the impacts of climate change on electricity generation.
He further revealed that the government is considering appointing an Energy Attaché at Nepal's Embassy in India to facilitate cross-border electricity trade. According to him, efforts are also underway to strengthen Nepal's energy diplomacy.
Minister Shrestha expressed his willingness to establish a high-level coordination mechanism in partnership with the private sector to address both policy-related and implementation challenges facing Nepal's energy industry.
During the meeting, IPPAN submitted a 38-point recommendation to the Ministry aimed at addressing policy and structural challenges in Nepal's energy sector. The proposals include granting power generation licenses to the private sector, constructing common transmission infrastructure, introducing an investment-friendly Energy Act, extending license validity periods, promoting green energy, improving Power Purchase Agreements (PPAs), and simplifying environmental approval processes.
IPPAN Chairman Mohan Dangi stated that Nepal has the potential to generate 30,000 MW of electricity within the next decade if the government provides adequate policy support. He expressed concern over delays in PPAs and the cancellation of project permits, warning that such uncertainties discourage investment.
Dangi urged the government to establish a high-level mechanism to resolve the sector's longstanding issues, emphasizing that achieving financial closure for hydropower projects is impossible without secured PPAs. He added that canceling project licenses would negatively affect investor confidence and the overall investment climate.
