4th June 2025, Kathmandu
The Independent Power Producers’ Association, Nepal (IPPAN) has called on the government to revise a key clause in the national budget. The clause requires electricity to be purchased under a ‘Take and Pay’ (only pay after use) model instead of the existing ‘Take or Pay’ model.
IPPAN Opposes Nepal Take-Pay Policy
Meeting With Energy And Finance Ministers
On Tuesday, IPPAN first handed over a memorandum to Energy Minister Deepak Khadka. Later, the delegation held a joint meeting with both Energy Minister Khadka and Finance Minister Bishnu Paudel.
During the meeting, IPPAN strongly opposed the shift to ‘Take and Pay’ in power purchase agreements (PPAs). The association warned that this policy could collapse the private hydropower sector.
Minister Khadka Calls Clause A Serious Mistake
Energy Minister Khadka accepted the memorandum at the ministry. He said that introducing a ‘Take and Pay’ clause after setting a roadmap to produce 28,500 MW of electricity is a serious mistake.
He stated that the government’s target includes exporting electricity to India and Bangladesh. According to him, 28,500 MW needs to be sold under ‘Take or Pay’ terms to meet export goals. Additionally, domestic demand is projected to reach 13,500 MW by 2035.
Therefore, Khadka argued that there is no urgency to shift to a ‘Take and Pay’ model. He criticized the budget provision as a decision against national development. He clarified that if the Nepal Electricity Authority (NEA) cannot manage electricity trade, a new entity should be formed for that purpose.
“If the clause came by mistake, it should be corrected. But if it was added deliberately, then the ministry will stand with the private sector,” Khadka assured.
He also noted that the budget plan contradicts his vision to reduce power imports from India during the dry season.
Ministry Must Build Or Allow Transmission Lines
Khadka emphasized the need for proper infrastructure. Either the state should build transmission lines or allow the private sector to do so. “If neither builds nor allows others, development will halt,” he said.
Meanwhile, Water Resources Secretary Sarita Dawadi said she had never seen a budget provision introduced without the ministry’s input. She added that the policy shift caught the ministry off guard.
Private Sector Alarms Over Clause
IPPAN President Ganesh Karki expressed deep concern. He said the clause could destroy the only sector that offers real economic growth potential.
Karki pointed to growing electricity exports to India and increasing interest from Bangladesh. Domestic demand is also rising every year. He argued the government should encourage more power production, not restrict it.
“The ‘Take and Pay’ provision is like a plan to send the country back to the days of oil lamps,” Karki said. “The government announces plans to produce 28,500 MW, but then limits PPAs to demand only. What is the government trying to do? Is it saying that power production has already reached its peak?”
He warned that if the policy is not corrected, 17,000 MW worth of private hydropower projects will be killed. These projects have already attracted investments of over NPR 66 billion, he added.
IPPAN: Clause Could Tarnish Minister’s Legacy
Senior Vice President Mohan Kumar Dangi also pressed the Energy Minister to act. He warned that if the clause remains, the minister’s legacy will be remembered as one that destroyed the energy sector.
He recalled how former minister Shailaja Acharya had opened the doors for private sector PPAs back in 1994. “Now, you have a similar opportunity to protect the sector,” Dangi said. “If not, your term will be blamed for its collapse.”
He further claimed that the ‘Take and Pay’ provision was not accidental. According to him, the NEA’s executive director had already hinted at it during an IPPAN program before the budget announcement.
Finance Ministry Meeting And Response
After meeting the Energy Minister, the IPPAN team met with Finance Minister Bishnu Paudel. They repeated their demand to remove the controversial clause.
Karki reiterated that the policy directly opposes the national energy roadmap. He urged the minister to revise the budget provision. Dangi added that if the clause is not removed, the energy sector will face devastation.
Finance Minister Paudel responded cautiously. He said he would first consult with relevant officials before making any commitment. However, he mentioned he prefers increasing domestic power use first. Only surplus electricity should be exported, he added.
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