IPPAN calls for 10-year energy emergency in Nepal amid regulatory hurdles, investment crisis

KATHMANDU: The Independent Power Producers’ Association, Nepal (IPPAN) has called on the Government of Nepal to declare a 10-year “Energy Development Emergency”, warning that the private hydropower sector is on the brink of collapse due to mounting bureaucratic obstacles, halted investments, and policy instability.

Addressing IPPAN’s 23rd Annual General Meeting on Tuesday, IPPAN President Ganesh Karki accused government agencies of pushing the private sector toward extinction, despite their significant role in ending load-shedding and generating billions in electricity exports.

“In the past, we turned to the government to resolve local obstructions during project construction. Today, we are forced to protest against the very government institutions that are inflicting the damage,” said Karki.

Private Sector in Crisis Despite Driving National Power Growth

President Karki said the private sector has already invested over NPR 1.3 trillion (Rs 13 kharba) in Nepal’s energy sector and is prepared to inject NPR 3 trillion (Rs 30 kharba) more over the next 10 years. Currently, the private sector is advancing 725 hydropower projects with a combined capacity of 34,484 MW, many of which are now at risk.

Karki revealed that 217 projects totaling 19,000 MW located inside national parks and forest areas have been halted due to a Supreme Court order, and called for an immediate legislative override (“sunset law”) to lift anti-development restrictions within the Environment, Forest, and National Park Acts.

“There is no alternative to declaring an Energy Development Decade and announcing a state of energy emergency,” he asserted.

Eight Key Grievances of Nepal’s Private Power Producers

IPPAN outlined eight major challenges faced by private power producers, demanding urgent government intervention:

PPA Delays:
Despite the removal of the controversial “take-and-pay” clause in the federal budget, Nepal Electricity Authority (NEA) has continued to stall Power Purchase Agreements (PPAs) by imposing new conditions.

No Relief for Flood-Damaged Projects:
Over 70 projects damaged by the 2080/81 monsoon floods have yet to receive promised compensation or government support.

Delays in RCOD and License Renewal:
The Ministry of Energy and NEA have failed to extend project deadlines, even in cases affected by earthquakes and economic downturns.

IPO Restrictions:
The government’s two-year-long ban on Initial Public Offerings (IPOs) and rights shares has led to an estimated NPR 100 billion (Rs 1 kharba) in opportunity loss and delayed construction of 1,000 MW in hydropower projects.

Anti-Private Sector Electricity Bill:
If the Electricity Bill, 2080, currently tabled in Parliament, passes in its current form, it would undermine private investment and control, IPPAN warned.

Electricity Curtailment in Monsoon:
NEA continues to refuse full purchase of electricity from private producers during the rainy season, citing lack of transmission capacity.

Illegal Double Taxation:
Local governments are illegally imposing additional taxes on projects already paying federal taxes, violating constitutional provisions.

Forest and National Park Barriers:
Projects are facing extreme delays due to slow environmental clearances, tree-cutting permissions, and legal blocks from conservation laws.

Massive Contribution, Minimal Recognition
Karki emphasized that since private investors entered the energy sector, Nepal’s installed capacity has increased from 252 MW to 3,625 MW, with the private sector contributing 2,923 MW, or 81% of the total.

Nepal earned NPR 17 billion from electricity exports last fiscal year and is expected to reach NPR 23 billion in the current year, showcasing the sector’s growing role in reducing trade deficits and strengthening the economy.

Political Praise but Policy Paralysis

Karki praised past bilateral agreements including the Joint Vision Statement on Power Sector Cooperation signed during former PM Sher Bahadur Deuba’s tenure, and the 10,000 MW export agreement with India signed under PM Pushpa Kamal Dahal.

However, he urged the government to act not as an obstacle but as a facilitator, warning that failure to address the ongoing regulatory and legal challenges could permanently derail Nepal’s power sector development.

“The state must act as a guardian, enabler, and promoter—otherwise the energy future of Nepal will be compromised,” Karki concluded.

The program also announced IPPAN’s decision to transform itself into a federal organization, signaling a broader institutional strengthening effort to coordinate energy issues across provinces.