IPPAN submits memorandum to PM Oli demanding withdrawal of ‘Take-and-Pay’ provision from PPA policy

KATHMANDU: The Independent Power Producers’ Association Nepal (IPPAN) has formally submitted a memorandum to Prime Minister KP Sharma Oli, urging the government to revoke the controversial ‘Take-and-Pay’ provision included in the upcoming fiscal year’s budget. The submission marks the beginning of IPPAN’s nationwide protest program aimed at safeguarding the future of private hydropower investment in Nepal.

Led by acting president Mohan Kumar Dangi, an IPPAN delegation met with Prime Minister Oli at the Office of the Prime Minister and Council of Ministers in Singha Durbar on Friday. The delegation expressed strong objections to the new Power Purchase Agreement (PPA) policy introduced in the FY 2082/83 budget, which proposes switching from the current ‘Take-or-Pay’ model to a conditional ‘Take-and-Pay’ system, particularly for Run-of-the-River (RoR) projects.

In response, Prime Minister Oli acknowledged the sensitivity of the issue and stressed the need for detailed discussions with energy stakeholders. He directed his secretariat to schedule a dialogue within Sunday or Monday to address IPPAN’s concerns.

Take-and-Pay’ Clause Triggers Industry-Wide Alarm

The controversial clause, included in the budget announced on Jestha 15, has sparked alarm across Nepal’s hydropower sector. The new PPA framework proposes that the Nepal Electricity Authority (NEA) purchase electricity from RoR projects only when necessary, as opposed to the existing ‘Take-or-Pay’ mechanism which mandates NEA to buy all produced electricity, providing guaranteed returns for investors and loan security for banks.

IPPAN argues that the proposed model eliminates investment security, discourages financing by banks and financial institutions, and ultimately risks collapsing the hydropower development momentum built by the private sector over the past two decades.

Despite three weeks of intense consultations with various ministries and institutions, IPPAN claims no serious response was given to their repeated appeals. Consequently, the organization launched its Phase 1 protest campaign starting Ashadh 6, beginning with the submission of the memorandum to the Prime Minister.

17,000 MW at Stake, Rs. 66 Billion Investment in Jeopardy

The memorandum warns that if the policy is not rolled back, over 350 hydropower projects with a combined generation capacity of 17,117 megawatts will come to a halt. Additionally, IPPAN revealed that a staggering Rs. 66.22 billion already invested in project studies and preliminary work could be lost, forcing developers into financial collapse.

IPPAN also stated that the ‘Take-and-Pay’ provision directly contradicts the government’s own energy roadmap, which envisions generating 28,500 MW of electricity over the next 10 years and exporting 15,000 MW to India and Bangladesh.

“This policy undermines investor confidence, poses a serious risk to the nation’s energy future, and contradicts the very vision the government has set for hydropower export and development,” said IPPAN Acting President Mohan Kumar Dangi.

Phase 1 of Protest Program Underway

As part of its protest strategy announced on Ashadh 5, IPPAN has launched a series of coordinated actions:

* Submission of memorandums to the Prime Minister, Finance Minister, and Energy Minister
* SMS campaigns targeting Speaker of the House of Representatives and chief whips of all political parties
* Coordinated press releases with private sector associations opposing the policy
* Wider mobilization of private sector stakeholders and the banking industry to raise collective pressure

Private Sector Warns of Energy Crisis

IPPAN has cautioned that if the government enforces the ‘Take-and-Pay’ model, it will drive away private investors from Nepal’s hydropower sector—potentially plunging the country into a renewed energy crisis. The association reminded that it was the private sector which had enabled Nepal to eliminate load-shedding by generating 3,000 MW in recent years under the ‘Take-or-Pay’ regime.

The current crisis, if unresolved, could have long-term repercussions on foreign investment, banking exposure in the energy sector, and Nepal’s ambition to become a regional electricity exporter.