IPPAN Demands ‘Take and Pay’ Removal: Future of Nepalese Hydropower
8th June 2025, Kathmandu
The Independent Power Producers’ Association Nepal (IPPAN) has formally demanded the removal of the controversial ‘Take and Pay’ provision from the national budget, warning that the clause threatens to derail private investment in Nepal’s hydropower sector.
IPPAN Demands Take-Pay Removal
The request was made during a meeting with Deputy Prime Minister and Finance Minister Bishnu Paudel at the Ministry of Finance on Sunday.
The current fiscal year’s budget, made public on Jestha 15(29 May), includes a provision stating that electricity generated from run-of-the-river (ROR) hydropower projects will be procured under a ‘Take and Pay’ model—a departure from the long-standing ‘Take or Pay’ practice.
IPPAN Warns Of Investment Fallout
During the meeting, Finance Minister Paudel reiterated that the new clause would not pose any hurdles to energy production. However, IPPAN strongly objected, stating that this clause would severely impact future investments and result in a lack of confidence among financial institutions and developers alike.
Ganesh Karki, President of IPPAN, emphasized that the “Take and Pay” clause means banks will no longer be willing to finance hydropower projects. “If the government only commits to buying electricity when it needs it, the financial risk becomes too high for both lenders and developers,” Karki noted. He warned that developers will no longer approach the Nepal Electricity Authority (NEA) for Power Purchase Agreements (PPAs) under this model.
Karki added that if the government is unwilling to support the investment made so far, promoters are even ready to return their licenses to the state, provided their expenses on studies and licensing are reimbursed.
Thousands of Megawatts In Limbo
IPPAN’s concerns are not unfounded. Over 350 hydropower projects — collectively representing 17,000 MW of potential capacity are currently awaiting PPA approval. These projects are based on run-of-the-river models and are now facing an uncertain future under the new policy. According to IPPAN, nearly Rs. 66 billion has already been invested in feasibility studies, surveys, and preparation for these projects, all of which could go to waste.
Leadership Voices United In Opposition
Mohan Kumar Dangi, Senior Vice-President of IPPAN, clarified that IPPAN has no objection to other budgetary points, but the inclusion of the ‘Take and Pay’ phrase has caused deep concern among developers who have been waiting for PPA approval since 2075 BS. “This single provision has discouraged our entire pipeline of projects,” he remarked, urging its immediate removal.
Uttam Blon, IPPAN Vice-President, echoed these sentiments, pointing out that private developers do not have legal rights to trade electricity independently in Nepal. “Without a legal framework for private electricity trade, bringing in ‘Take and Pay’ is effectively like shutting the door on private sector participation,” he said. Currently, NEA is the sole purchaser of electricity, and any clause limiting its commitment hinders the entire private development model.
Similarly, Prakash Dulal, IPPAN’s Deputy General Secretary, questioned the logic of signing PPAs under a model that doesn’t guarantee bankability. “If banks refuse to invest, what’s the point of signing such PPAs?” he asked.
Finance Minister: No Intention To Discourage Private Sector
Following the IPPAN delegation’s concerns, Finance Minister Bishnu Paudel stated that the government has no intention of discouraging private sector participation in the energy sector. He assured IPPAN that any challenges in project development would be addressed through dialogue and policy adjustments. “The government welcomes private investment and is committed to resolving genuine issues that arise in the implementation phase,” he added.
Energy Minister And Political Figures Also Alarmed
The Ministry of Energy, led by Minister Deepak Khadka, has also clarified that the Take and Pay provision was not proposed by the Energy Ministry and that they do not support it. In recent meetings with IPPAN, the Energy Minister, Finance Minister, and even former Prime Ministers were briefed about the long-term negative implications the clause may have on Nepal’s clean energy future and foreign direct investment in hydropower.
IPPAN Threatens Phased Protests
Frustrated by the government’s inaction so far, IPPAN has announced it may begin phased protest programs if the budget clause is not revised or removed. The organization believes that the current wording not only halts new investment but also undermines Nepal’s commitment to green energy, self-reliance, and export opportunities.
The Way Forward: Will The Clause Be Reconsidered?
As pressure mounts from all corners of the energy sector, the government faces a pivotal decision. Will it stand by the ‘Take and Pay’ clause for fiscal control, or revise the policy to ensure investment-friendly conditions and uphold Nepal’s vision for hydropower-driven economic growth?
For now, developers, financial institutions, and international investors await clarity on whether Nepal remains a viable destination for clean energy investment or whether policy uncertainty will push them away.
For more: IPPAN Demands Take-Pay Removal
