Private Power Producers Warn of Protests and Potential Blackout Over 'Take-and-Pay' PPA Provision

Independent power producers in Nepal have warned of phased protests—and potentially halting power generation—if the government does not revise the recently introduced 'take-and-pay' provision in the Power Purchase Agreement (PPA) for run-of-river hydropower projects.

Speaking at a press meet organized by the Independent Power Producers’ Association of Nepal (IPPAN) in Kathmandu on Thursday, developers strongly objected to the provision included in the upcoming fiscal year's budget, claiming it threatens the viability of nearly 17,000 MW of hydropower projects and puts over Rs 66 billion in investment at risk.

The event, held without any formal protocol or government presence, marked the first time IPPAN used a black banner in a public program—a symbolic gesture of protest. Developers criticized the ‘take-and-pay’ approach, under which the Nepal Electricity Authority (NEA) would only pay for electricity it actually purchases, as opposed to the ‘take-or-pay’ model that guarantees payment regardless of usage. They also raised concerns about other systemic issues: delayed PPAs after project completion, restrictions on issuing IPOs before projects are operational, penalties imposed despite delays caused by government agencies, and license non-renewals due to the inaction of the forest ministry.

IPPAN Chair Ganesh Karki said the sector is being pushed to the brink by a single line in the budget that was neither proposed by official bodies nor discussed with stakeholders. He stressed that if the provision is not corrected, developers will have no option but to begin decisive protests, which could lead to blackouts. Senior Vice-President Mohan Kumar Dangi warned that a deliberate campaign is underway to derail private investment in hydropower—much like the collapse of Nepal’s carpet industry decades ago.

Developers also expressed alarm over proposed changes to the Electricity Act and Water Resources Act, saying these could further discourage private investment. They said clauses requiring 100% local consent for water use would make it nearly impossible to develop hydropower projects. Meanwhile, a struggle committee has been formed under IPPAN to chart the course of protest programs. Developers said they would begin by submitting memorandums to ministers, followed by sit-ins with shareholder participation, and ultimately consider suspending electricity generation if their demands are not addressed.