Nepal Energy Policy Push 2026

Annapurna Rural Municipality operates six hydropower projects with 176 MW and has three under construction with 255.5 MW, driving local development but raising concerns over aquatic life decline, drying traditional water sources, and hot spring impacts.

All seven Nepalese provinces prioritized energy and water resource sectors in their budgets, emphasizing hydropower, solar energy, and irrigation; Madhesh Province additionally providing farmers 50% electricity tariff subsidies to boost productivity.

Nepal announced the Quad Project, integrating infrastructure, tourism, agriculture, and hydropower development in multiple geographical growth poles and corridors to boost economic growth and manage migration despite budget and coordination challenges.

API Power Company Limited decided to sell 15 lakh units of Ingwa Hydropower Limited shares in Nepal's secondary market as part of its strategic business and investment planning.

Government adopted a stricter Power Purchase Agreement policy cancelling 38 delayed hydropower projects totaling 1,388 MW and issuing immediate PPAs for 176 projects under 10 MW to reform sector delays and promote private participation.

MCA-Nepal began construction of Ratmate and New Damauli substations and a 297 km transmission line funded by a US$550 million US grant and US$197 million Nepal government contribution to enhance transmission reliability and regional power trade.

Negotiations restarted on transferring 50% ownership of the 60 MW Khimti-1 Hydropower Project to Nepal Electricity Authority, aiming to resolve past disputes over ownership, purchase agreement, royalty, and taxes.

Butwal Power Company Limited launched a 50 kW green hydrogen pilot project in Pyuthan using renewable electricity from the Jhimruk Hydropower Project to produce hydrogen, advancing clean energy innovation in Nepal.

Nepal allocated NPR 114.02 billion to the Ministry of Energy, Water Resources, and Irrigation for fiscal year 2083/84, with NPR 70 billion targeting 1,040 MW additional electricity and transmission expansion, and NPR 43 billion for water resources and irrigation projects to extend irrigation by 15,776 hectares.

Nepal re-invited international bids to complete remaining construction of the Sun Koshi-Marin Diversion Multipurpose Project, which will provide irrigation for 122,000 hectares and generate 31.07 MW hydropower.

Energy Minister Biraj Bhakta Shrestha highlighted green hydrogen as vital for Nepal's sustainable energy future, with government backing including the Green Hydrogen Policy-2080 and pilot project funding.

NIC Asia Bank committed Rs 95.20 crores to the 7.29 MW Phalankhu Khola Hydroelectric Project in Rasuwa, which is expected to generate about 38.74 GWh annually, supporting Nepal's clean energy and sustainable development aims.

The government allocated NPR 114.02 billion for energy, water resources, and irrigation for the upcoming fiscal year, targeting 1,040 MW additional electricity including 670 MW from hydropower and restructuring the Electricity Authority into three companies.

Nepal's 2026/27 budget plans to create a sovereign wealth fund from foreign currency reserves and emphasizes artificial intelligence, clean energy, and digital infrastructure development to position Nepal as a regional tech hub.

Energy Minister Biraj Bhakta Shrestha announced that reservoir-based hydropower projects are a key national priority to enhance Nepal's energy security and support economic growth, addressing climate change risks and water management needs.

Nepal's government reconfirmed the 2035 target to generate 30,000 MW electricity focusing on both reservoir-based and run-of-the-river hydropower projects, alongside efforts to boost domestic consumption and export surplus electricity with infrastructure expansions.

Power purchase agreement bottlenecks are stalling hydropower projects and private sector participation, putting Nepal's target of 30,000 MW electricity generation in the next decade at risk while calls grow for revised laws and a one-window system.

In the first ten months of fiscal 2083/84, Nepal secured NPR 45.32 billion in foreign investment commitments across 728 projects, notably in agro-based industries, tourism, and IT sectors, supporting economic growth targets.

IPPAN Senior Vice President Mohan Dangi highlighted private sector's role in increasing electricity production capacity from 254 to 4300 MW since 2055 BS, producing approximately 3500 MW currently, urging further government support for energy development.

Nepal and China scheduled the third meeting of the Mechanism for Facilitation to expedite implementation of bilateral infrastructure projects including the Syaphrubesi-Rasuwagadi Highway and Kathmandu Ring Road Improvement, advancing Belt and Road Initiative cooperation.

Government Policies and Programs for 2083 aim to transform Nepal into a digital, green economy with plans including 30,000 MW electricity production and establishing Nepal Carbon Authority for carbon trading.

Government unveiled FY 2083/84 policy focused on 7% economic growth, digital transformation, infrastructure expansion, and set a target to produce 30,000 MW electricity to enhance connectivity and tourism.

Nepal’s FY 2026/27 policy proposes seven percent annual GDP growth emphasizing hydropower, IT, tourism, agriculture, and green industry but lacks clear implementation strategies and institutional reforms, risking ineffective outcomes.

President Ram Chandra Paudel presented Nepal’s Policy and Program for fiscal year 2026/27 featuring a 100-point agenda focused on governance, economic reform, infrastructure, agriculture, education, healthcare, and anti-corruption to guide the budget and legislative sessions.

Finance Minister Dr. Swarnim Wagle emphasized energy sector as a key driver for economic growth with a government commitment to prioritize it to boost the national economy while supporting private investment.

The Independent Power Producers’ Association of Nepal submitted a 53-point proposal urging investor-friendly policies and expanded private participation to support government’s 30,000 MW electricity generation target by 2036.

Nepal government plans to tighten environmental studies and electricity purchase agreements for hydropower projects to protect local rights and financial feasibility, forming committees to review permits and clarify policy in 120 days.