IPPAN Demands Key Policy Reforms: Hydrology Penalties, IRR Cap Removal for Nepal Hydropower Investors
26th May 2025, Kathmandu
A delegation from the Independent Power Producers’ Association Nepal (IPPAN), led by President Ganesh Karki, met with Nepal Electricity Authority (NEA) Executive Director Hitendra Dev Shakya to raise concerns about the delayed implementation of Nepal’s hydropower roadmap and key private sector challenges.
IPPAN Demands Key Policy Reforms
The meeting took place at NEA’s central office. It focused on aligning policy commitments with on-ground execution, especially in light of Nepal’s 28,500 MW hydropower development roadmap.
IPPAN Seeks Urgent Action on Roadmap Provisions
During the discussion, IPPAN President Ganesh Karki highlighted that while the government-approved roadmap had passed through NEA’s Board of Directors, several of its provisions remain unaddressed.
He pointed out that critical elements, such as the removal of hydrology penalties and the lifting of the Internal Rate of Return (IRR) cap, have not been enforced. According to Karki, this lack of implementation is discouraging investment and complicating financial planning for private hydropower developers.
These measures, he added, were introduced specifically to make the sector more attractive and bankable for investors. Without immediate action, the roadmap will remain a document of promises rather than progress.
Private Developers Face Growing Challenges
Karki and his team also brought forward several pressing concerns faced by private developers:
Extension of Required Commercial Operation Date (RCoD): Many private projects are at risk of missing their commercial deadlines due to reasons beyond their control. IPPAN asked NEA to formally extend these timelines.
Elimination of Contingency Clauses: Developers urged the removal of contingency provisions in Power Purchase Agreements (PPAs), which create uncertainty in revenue forecasts.
Mandatory Purchase in Monsoon Season: IPPAN called on NEA to purchase all power produced by private plants during the rainy season, when generation capacity is at its peak.
Scrapping of “Take and Pay” PPAs: Instead, they proposed the adoption of “Take or Pay” agreements to guarantee payment for electricity produced, regardless of actual off-take.
Transmission Loss Deductions: Developers argued against deductions made for energy loss in NEA’s transmission lines, saying private producers should not bear the burden of system inefficiencies.
These demands reflect the broader frustration within the private sector over a lack of timely coordination and support.
NEA Cites Budget Constraints, Seeks Government Support
In response, Executive Director Hitendra Dev Shakya acknowledged the issues raised. He admitted that NEA lacks sufficient budget to carry out all planned transmission line expansions.
Shakya emphasized that without government-backed financial guarantees, NEA cannot build the infrastructure needed to accommodate rising power generation. He suggested that both public and private sectors must work together, but the government must lead with policy clarity and fiscal commitment.
Furthermore, Shakya expressed willingness to engage with IPPAN regularly and to explore collaborative models for transmission development, provided there is policy support.
Strong IPPAN Representation
The IPPAN delegation consisted of several high-level officials, underlining the seriousness of the discussion. In addition to President Ganesh Karki, the delegation included:
Senior Vice President: Mohan Kumar Dangi
Vice President: Ram Prasad Acharya
Deputy General Secretary: Prakash Dulal
Secretary: Bikram Bisht
Executive Members: Shankar Basyal and Suman Joshi
Advisor: Dr. Atma Ram Ghimire
Chief Executive Officer: Bhim Gautam
This diverse team represented a united voice on behalf of independent power producers across Nepal.
Focus on Partnership and Policy Clarity
Throughout the meeting, both sides agreed on the importance of cooperation. Nepal’s power sector, especially hydropower, holds significant potential for domestic growth and cross-border energy trade. However, to unlock that potential, stakeholders must align on policy, finance, and infrastructure.
IPPAN reiterated its commitment to working with the NEA and government agencies. But they also called for clear decisions, fast execution, and better protection for private investment.
Nepal’s hydropower targets require large-scale private sector participation. That, in turn, depends on predictable returns, efficient infrastructure, and fair regulations.
The Way Forward
The NEA–IPPAN dialogue marks a positive step toward bridging the gap between policy intention and implementation. While challenges remain, both parties expressed interest in continued discussions and long-term coordination.
Nepal’s energy future depends on converting potential into power, both literally and in terms of partnerships. With hydropower poised to drive economic transformation, stakeholders cannot afford delays and disconnects.
IPPAN plans to continue raising awareness about the sector’s bottlenecks and advocating for reforms that empower private developers. Meanwhile, NEA seeks policy and budgetary clarity to execute infrastructure projects more effectively.
About IPPAN
The Independent Power Producers’ Association, Nepal (IPPAN) represents the collective voice of the private hydropower industry. It advocates for investment-friendly policies, infrastructure development, and public-private cooperation to meet Nepal’s growing energy needs.
For more: IPPAN Demands Key Policy Reforms
