30,000 MW Dream at Risk? Nepal’s Energy Sector Paralyzed by Policy Limbo One Month Into New Government
Despite promises of economic prosperity, the new government's first month has failed to resolve deep-seated issues in Nepal's energy sector, including PPA stagnation and infrastructure delays.
One month after its formation, the new government is facing significant challenges in revitalizing Nepal's energy sector, which is considered the backbone of the national economy. Despite slogans of good governance and economic prosperity, core issues such as policy ambiguity and administrative delays continue to frustrate energy producers. A major bottleneck remains the suspension of Power Purchase Agreements (PPA). The Nepal Electricity Authority (NEA) has yet to decide on the PPA framework, specifically between 'Take or Pay' and 'Take and Pay' models, as it awaits clear directives from the Ministry of Energy and the Ministry of Finance. Interestingly, while hydropower PPAs are stalled, solar energy projects are receiving approvals, leading to concerns of policy discrimination among developers.
Beyond PPA issues, the sector faces a capital crisis. Dozens of hydropower companies are unable to move forward with Initial Public Offerings (IPOs) because the Securities Board of Nepal (SEBON) remains leaderless. Furthermore, the construction of strategic transmission lines is hindered by long-standing disputes over land acquisition and forest clearances. The government has also shown little progress in resolving the multi-billion rupee tariff dispute regarding trunk and dedicated feeders. While the government has formed a task force to study these issues and maintains an ambitious goal of producing 30,000 MW in ten years, industry experts believe that without swift execution and policy clarity, these targets will remain unachievable.