Nepal’s private sector has significantly enhanced its capacity to invest in large-scale hydropower projects, with domestic companies now involved in 16 projects each exceeding 100 megawatts (MW) in capacity. According to the Independent Power Producers' Association of Nepal (IPPAN), these projects collectively represent around 3,000 MW in potential electricity generation.

This growth in capacity has been driven by increased lending from banks and financial institutions, which have become more willing to finance private sector-led hydropower ventures. The trend marks a major shift from the early 2000s, when private investment in the sector was minimal and financial institutions were hesitant to fund large infrastructure projects.

Seven of the 16 major projects are already under construction with financial resources secured. These include the 255 MW Upper Tamor, 160 MW Lapche Khola, 135 MW Manang Marsyangdi, 120 MW Rasuwa Bhotekoshi, 102 MW Upper Marsyangdi-1, 100 MW Super Trishuli, and 180 MW Kaligandaki Gorge hydropower projects.

In contrast, the remaining nine large-scale projects, although under the ownership of domestic private developers, have yet to secure financing.

Among the projects awaiting financial closure are the 340 MW Budhigandaki, 298 MW Tila-1, 296 MW Tila-2, 226 MW Budhigandaki-KK, and 216 MW Bajhang Upper Seti. Additional projects such as the 166 MW Super Tamor, 139 MW Lower Manang Marsyangdi, 128 MW Tamor Mewa, and 103 MW Budhigandaki-A are also pending financial management.

IPPAN officials note that Nepal’s electricity generation has increased significantly since private sector involvement began in around the year 2000. Before that, the government had managed to generate just 365 MW of electricity over a span of nearly 90 years. The entry of private investors has not only accelerated power generation but also allowed Nepali entrepreneurs to gain the experience needed to develop larger and more complex projects.

Mohan Kumar Dangi, Senior Vice President of IPPAN, said that investors who can raise equity should prioritize large-scale projects, noting that the social responsibility and risks involved are comparable to those of smaller ventures.

“The government needs to improve policy aspects and create a more conducive environment for investors,” he said. Dangi emphasized that private investment has played a key role in the country’s recent energy development.

IPPAN President Ganesh Karki added that if the government introduces necessary policy reforms, domestic investors are capable of developing projects of up to 500 MW. However, he pointed out that securing financing remains a major challenge for such high-capacity developments. Karki urged the banking sector to make it easier to access loans for energy projects and also called for clear policies regarding transmission line construction and the wheeling charges applicable to private sector-built infrastructure.

NEA Asks 51 Hydropower Projects to Submit PPA Details Within Four Days

In a related development, the Nepal Electricity Authority (NEA) has asked 51 hydropower projects that have already signed agreements to submit project details within four days. The NEA issued the notice as part of its effort to prepare a priority list for signing Power Purchase Agreements (PPAs).

Earlier, on May 14, the NEA had invited developers of 54 hydropower projects—with a combined generation capacity of about 5,000 MW, including run-of-river (ROR) and partial reservoir (PROR) types—to approach the Department of Electricity Trade within 30 days for PPA processing on a priority basis.

Following this, at its 994th board meeting on May 16, the NEA formed a committee to prepare a priority list of projects eligible for PPAs.

To that end, the committee has written to the concerned developers requesting that they submit the necessary documentation within four days so that the priority report can be compiled and submitted promptly. The move is aimed at accelerating the PPA process and enabling timely development of hydropower infrastructure in Nepal.