18th February 2025, Kathmandu
Ganesh Karki, President of the Independent Power Producers Association of Nepal (IPPAN), has raised concerns about the government’s policies. He claims that these policies are causing significant delays in the hydropower sector.
Nepal Hydropower Investment Crisis
As a result, investments worth around 15 trillion rupees are being stalled. Karki emphasized that these restrictions are hampering the industry’s potential for growth.
Investment in the Sector at Risk
Speaking at an event hosted by the Nepal Economic Journalists’ Association, Karki highlighted that the sector, which holds substantial growth potential, is facing uncertainty due to government actions. He pointed out that despite the government’s goal to generate 28,500 MW of electricity and export 15,500 MW, the plans are hindered by policy-related obstacles. Achieving these targets is estimated to require an investment of 62 trillion rupees.
Nepal’s Hydropower Growth Potential
Karki mentioned that Nepal’s energy producers have made significant strides. Initially, the country’s capacity was just 1 MW, but now it can construct between 100 and 200 hydropower projects. However, he emphasized that attracting foreign investment for larger projects remains a challenge due to the current regulatory environment.
Delays in IPO Issuance
One of the key issues Karki discussed was the delay in issuing Initial Public Offerings (IPOs) for hydropower projects. The Securities Board of Nepal (SEBON) has yet to approve these IPOs, further complicating efforts for energy producers to raise capital. According to Karki, there is a legal requirement to allocate 10 percent of shares to local governments, but local governments have not been purchasing them. This has created a roadblock for producers, who cannot move forward with their IPOs without SEBON’s approval.
Conflict Between Parliamentary Committees
Karki also pointed out that the Public Accounts Committee of Parliament had instructed a halt on IPO issuance. This directive has sparked a conflict between the Public Accounts Committee and the Finance Committee, causing confusion and further delays in the sector. Karki believes that instead of focusing on regulatory disputes, more attention should be given to actual project development and business operations.
Call for Government Action
Despite these challenges, Karki remains hopeful that the government will resolve these issues. He urged for changes to be made to the existing regulations so that hydropower producers can proceed with their projects and contribute to achieving the government’s energy goals. The 15 trillion rupees in investment currently at stake could play a crucial role in the country’s energy future, and Karki called for more support for the industry.
Conclusion
The hydropower sector in Nepal is at a crossroads. With significant potential for growth, the government must create a more conducive environment for investment and development. The challenges faced by energy producers must be addressed if Nepal is to meet its ambitious energy targets.
For more: Nepal Hydropower Investment Crisis