Investors Troubled by Demands for Free Shares in Hydropower Projects in the Name of ‘Gen-Z’ and Locals

Investors in Nepal’s hydropower sector have grown increasingly concerned as project construction faces repeated obstructions due to demands for free shares, separate royalties and large cash payments in the name of “Gen-Z groups” and local residents.

Although hydropower developers are already required by law to issue 10 percent shares to local residents and pay royalties as stipulated by the government, investors say new and unlawful demands have emerged in recent years. These include calls for free shares, cash payments worth millions of rupees, and compensation for the use of rivers, streams and government land.

Ganesh Karki, President of the Independent Power Producers’ Association, Nepal (IPPAN), said activities demanding free shares and cash—despite having no legal basis—have begun to obstruct project construction, creating serious concern among investors.

“We have been providing shares as mandated by law, and projects continue to do so. Royalties are also being paid in line with government provisions,” Karki said. “However, recently, various groups have started demanding free shares and cash in violation of the law, which has discouraged the private sector that has significantly contributed to energy development.”

Karki also said frustration within the private sector has increased as some local governments in districts such as Solukhumbu and Dolakha have begun unilaterally imposing additional royalties. He said IPPAN has repeatedly written to and held meetings with the Prime Minister, Finance Minister, Energy Minister and the Minister for Federal Affairs, urging them to stop such illegal practices and ensure law and order.

“Despite repeated appeals through meetings and letters, the government has not taken the issue seriously,” he said, adding that officials often avoid engagement or fail to respond.

Following the shutdown of power generation at the Bhote Koshi Hydropower Project, IPPAN met Home Minister Om Prakash Aryal and requested immediate intervention. The home minister reportedly instructed the Chief District Officer by phone to help resolve the issue, assuring that the government was prepared to curb activities that discourage private-sector investment.

Despite this, IPPAN has continued to write to the Prime Minister, Energy Minister and Home Minister, seeking support to resume construction work after similar problems surfaced at other projects.

Karki said that although some issues appeared to move toward resolution after the formation of a new government, obstructions to hydropower projects have continued to increase, underscoring the need for a more serious and timely government response.

“After the Bhote Koshi issue, there was hope that such problems would be resolved, but they have instead intensified,” he said. “The private sector accounts for more than 80 percent of electricity generation, and it is the government’s responsibility to encourage, not discourage, it by taking immediate action.”

From September 10, power generation at the 45 MW Bhote Koshi Hydropower Project was halted for 32 days after a group identifying itself as a ‘Gen-Z’ group demanded 10 percent free shares, among other conditions.

The issue was resolved on October 12 after an agreement was reached between Bhote Koshi Gen-Z Public Limited—representing local residents—and Bhote Koshi Power Company Pvt Ltd to issue 10 percent shares at a face value of Rs 100 per share in the company’s name.

Following the Bhote Koshi settlement, it was expected that similar disputes would also be resolved at projects including 36 MW Balephi, 22 MW Moonlight, 1.5 MW Seva, 1.5 MW Rising, 1.5 MW Gaunghar, 7 MW Yambuling, 40 MW Balephi, 36 MW Upper Balephi, 41 MW Neshum Khola and 46 MW Sita Hydro.

However, investors say fresh obstructions have recently emerged at projects such as Bhote Koshi–1 and Brahmayani, where various groups have again demanded free shares, disrupting construction activities.