Committee Recommends Cancelling Licenses of 38 Non-Performing Hydropower Projects
A high-level committee formed by Nepal’s Ministry of Energy has recommended the cancellation of licenses for 38 hydropower projects that failed to make progress despite securing Power Purchase Agreements (PPAs).
A high-level committee formed by Nepal’s Ministry of Energy, Water Resources and Irrigation has recommended the cancellation of licenses for 38 hydropower projects that have failed to make meaningful progress despite obtaining Power Purchase Agreements (PPAs). The recommendation is part of a broader effort under the government's 100-point governance reform agenda to improve efficiency and accountability in the energy sector.
According to the committee’s report submitted to Energy Minister Viraj Bhakta Shrestha, the 38 projects, with a combined capacity of 1,388 MW, have shown virtually no progress and should have their licenses revoked. The report also recommends immediate cancellation of 11 additional projects totaling 169 MW that received permits before 2019 but have failed to advance development activities.
The committee further identified 75 hydropower projects with a combined capacity of 4,121 MW as “problematic” and recommended initiating regulatory action against them. At the same time, projects that have achieved more than 50 percent physical progress have been prioritized for support and facilitation to ensure timely completion.
A key recommendation of the report is the elimination of the long-criticized “license raj” in Nepal’s hydropower sector. The committee has proposed that future survey licenses be issued only through competitive processes to enhance transparency and prevent speculative license holding.
The report also suggests restricting founders from selling their shares for five years after obtaining survey permits, ensuring that only serious investors participate in project development. Additionally, it calls for removing overlapping responsibilities among the Investment Board Nepal, the Ministry of Industry, and the Ministry of Energy to streamline project approvals and implementation.
The committee has also urged the government to immediately sign PPAs for 176 hydropower projects below 10 MW capacity, which could significantly boost domestic electricity generation and accelerate energy sector growth.