Nepal's Hydropower Crackdown: Government Targets Stalled Projects to Unlock Energy Potential
Nepal's Energy Minister Biraj Bhakta Shrestha announces a strict review of hydropower projects holding licenses without progress, aiming to revoke permits for inactive sites and support genuine investors in the sector.
Nepal is set to launch a decisive crackdown on hydropower projects that have failed to move forward despite holding government licenses. Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha confirmed that the government will study and classify stalled projects to determine necessary actions, signaling a major shift toward sector accountability .
The Scale of the Stagnation
The urgency of this move is driven by alarming statistics within the sector. Over half of Nepal's licensed hydropower projects are showing weak progress, with 178 out of 274 total projects sitting below 25% completion . The Department of Electricity Development has specifically flagged 108 projects for unsatisfactory progress, while a high-level committee recently recommended revoking licenses for 38 projects that have signed Power Purchase Agreements (PPAs) but failed to begin meaningful construction .
Some licenses have remained inactive for up to eight years, a trend Prime Minister Pushpa Kamal Dahal previously condemned as a practice of acquiring permits without initiating work .
Support for Genuine Investors
While the government tightens its grip on non-performing entities, Minister Shrestha emphasized that genuine investors will receive full support. During a meeting with the executive committee of the Independent Power Producers' Association, Nepal (IPPAN), the Minister stressed that the crackdown aims to discourage the habit of holding licenses without starting work, ensuring that resources are allocated to active developers .
Why Projects Are Stalled
The bottlenecks behind these delays are complex, ranging from financing delays and regulatory hurdles to political instability and land acquisition disputes . Additional challenges include the Supreme Court's ongoing scrutiny of infrastructure projects inside natural protected areas, which has stalled an estimated 25,000 MW of potential capacity . The pandemic also previously pushed back completion dates for nearly 50 projects, contributing to the current gridlock .
With the new budget provision for fiscal year 2026/27 explicitly allowing license cancellations for non-compliant projects, Nepal is making a clear statement: the era of dormant licenses is ending .