The Independent Power Producers’ Association Nepal (IPPAN), the umbrella body of private investors in the country’s energy sector, has announced a phase-wise protest campaign against the government’s decision to adopt a ‘take-and-pay’ model in power purchase agreements (PPAs).
The ‘controversial’ provision, introduced through the national budget for the upcoming fiscal year on May 29, replaces the long-standing ‘take-or-pay’ system. Under the new model, the Nepal Electricity Authority (NEA) will pay only for the electricity it purchases, as opposed to the previous model that required payment regardless of actual consumption.
Energy Minister Deepak Khadka has distanced himself from the decision, saying the provision was not his idea. Finance Minister Bishnu Paudel, on the other hand, defended the policy during a recent meeting with an IPPAN delegation, claiming it would not hinder Nepal’s energy ambitions.
Read: FM Paudel in the Hot Seat as 'Take-and-Pay' Sparks Uproar in Power Sector
IPPAN members have strongly rejected that claim, warning that the shift could erode investor confidence, discourage future investment, and severely disrupt momentum in the hydropower sector. They argue that the new policy jeopardizes billions of rupees already invested and puts future projects at risk.
“Nepal’s private sector has invested Rs 66.22 billion in hydropower projects that are now effectively at risk by this policy,” IPPAN said in a statement issued Thursday, June 19. “The budget announcement that run-of-river projects will be developed on a take-and-pay basis has made many under-construction and planned projects financially unviable.”
Currently, Nepal’s installed electricity generation capacity stands at around 3,600 megawatts, with private producers contributing more than 80 percent. According to IPPAN, more than 350 hydropower projects—representing a combined capacity of over 17,000 megawatts—are currently in the study or licensing phase and now face uncertainty.
Read: IPPAN Urges Government to Remove ‘Take and Pay’ Provision from Budget
Banks, they noted, are increasingly reluctant to finance projects that do not guarantee power purchase through a take-and-pay agreement.
IPPAN also criticized the government for inaction, saying repeated appeals to the prime minister, finance minister, and energy minister have gone unanswered.
As part of its first-phase protest program, IPPAN has scheduled the following actions:
June 20: Submission of memorandums to the Prime Minister, Finance Minister, and Energy Minister
June 21: SMS campaign urging key stakeholders to withdraw the provision
June 22: Coordinated social media campaign opposing the take-and-pay model
June 23: Joint statement with other private sector organizations following consultations
June 24: Mass SMS messages to the Speaker and chief whips of political parties in the House of Representatives, urging the provision’s removal
“If the provision is not withdrawn before the budget is endorsed by Parliament, we will escalate our protest into second and third phases,” said IPPAN Acting President Mohan Kumar Dangi. These escalated actions could include symbolic gestures such as returning project keys to the government, he added.
