The government has decided not to enter into electricity purchase agreements (PPAs) indiscriminately, citing potential risks to the national economy. Energy, Water Resources and Irrigation Minister Biraj Bhakta Shrestha said future PPAs would be based on electricity demand, consumption capacity, transmission infrastructure and market requirements.

Minister Shrestha warned that signing PPAs without ensuring a market for the electricity generated could create financial burdens for the government, private developers and the public. He said preliminary preparations have been completed for a need-based PPA framework, while a decision regarding the Required Commercial Operation Date (RCOD) is expected next week.

The government is also working to attract private investment in electricity transmission infrastructure, as the state alone cannot finance transmission expansion every year. Transmission projects have started adopting the public-private partnership (PPP) model, with wheeling charges expected to improve the bankability of such projects.

Projects developed under the Build-Own-Operate-Transfer (BOOT) model could operate for up to 25 years, creating opportunities for long-term investment in transmission infrastructure. The government is also preparing a national transmission master plan, under which transmission projects will be awarded through transparent and competitive processes.

According to Minister Shrestha, the government also plans to promote electricity trading after completing the necessary legal framework. Electricity trading is expected to help balance power generation, transmission and consumption while supporting more systematic and need-based decisions regarding PPAs.