The Supreme Court's annulment of the amendment to the National Parks and Wildlife Conservation Act 2029 has left the future of 242 hydropower projects, with a combined capacity of 16,735 megawatts, uncertain. The amendment had allowed projects of national importance to operate within national parks, reserves, and conservation areas.

The government amended the act through an ordinance ahead of the Third Investment Summit in late April, permitting the operation of national priority projects, those approved by the Investment Board, or projects of national pride within conservation areas. The amendment emphasized maintaining the coexistence of nature and humans. This ordinance was later ratified by parliament.

However, advocate Dilraj Khanal challenged the amendment in the Supreme Court. On January 15 , the Constitutional Bench declared the amendment unconstitutional, effectively halting hydropower projects within conservation areas.

The Annapurna and Gaurishankar Conservation Areas are among the most affected regions. In the Annapurna Conservation Area, 78 projects with a capacity of 2,554 MW are stalled, while 41 projects with a capacity of 2,754 MW face uncertainty in the Gaurishankar Conservation Area.

Ganesh Karki, president of the Independent Power Producers Association of Nepal (IPPAN), expressed concern about the decision's impact. “The future of projects worth billions of rupees is now uncertain. Securing approval from the Ministry of Forests for hydropower projects has become increasingly challenging, taking years to process. Even if approval is granted, the cost of using forest land has tripled,” Karki said during IPPAN’s silver jubilee event.

Karki also criticized redundant bureaucratic hurdles. “After obtaining a license for study and investing significant resources, we are required to seek permission again from the Department of National Parks, even after the Ministry of Energy grants approval. How can we build projects if there are obstacles related to conservation areas?” he questioned.

IPPAN working committee member Bharat Parajuli warned that the court ruling could hinder the government's target of generating 28,500 MW of electricity by 2035. “Most hydropower projects are planned in hilly regions, often overlapping with national parks or reserves. This decision makes it challenging to construct both hydropower projects and transmission lines,” he explained.

The annulment has placed the development of Nepal's hydropower sector at a crossroads, raising concerns about achieving the country’s ambitious energy goals.