Government Extends Hydropower Project Licenses to 50 Years for Reservoir-Based Projects

The Government of Nepal has decided to fix the license duration for reservoir-type hydropower projects at 50 years, aiming to attract private sector investment in the sector, the Ministry of Energy, Water Resources and Irrigation said.

The decision comes amid concerns that the existing shorter license period for reservoir projects had been discouraging private investors. A statement issued by the ministry noted that the move is expected to create a conducive investment environment for long-term projects and enhance the country’s energy security.

The license term was extended through a ministerial-level decision taken by Energy Minister Biraj Bhakta Shrestha.

While the Independent Power Producers’ Association of Nepal (IPPAN) welcomed the ministry’s decision, it also raised certain questions. IPPAN noted that although the election manifesto of the Rastriya Swatantra Party (RSP) had promised to extend the license period to 50 years for all hydropower projects, the minister’s directive only covers reservoir-type projects.

“There is a clear gap between the minister’s executive order and his party’s commitment,” said Prakash Dulal, Deputy General Secretary of IPPAN. “The RSP manifesto explicitly stated that the license duration for all hydropower projects would be made 50 years. But this directive only includes reservoir-type projects. Is the RSP trying to step back from its commitment?”

Currently, the private sector has largely invested only in run-of-river projects.

According to Dulal, while Section 5 of the Electricity Act provides for a 50-year license period for all projects, the regulations have capped it at 35 years. “The party must fulfill its promise to the people. The license period should be increased to 50 years for all types of projects, not just reservoir ones,” he added.

IPPAN President Ganesh Karki described the minister’s initiative as a welcome move. “The manifesto promised a 50-year term for all projects. What has been initiated now is good,” Karki said. “We are hopeful that this will not be limited only to reservoir projects but implemented for all. Our request and expectation are that the license period should be made 50 years for all types of projects, in line with the spirit of the act.”

Minister Shrestha has said that a time-bound action plan has been made public to make the energy sector result-oriented. He maintained that the directives and decisions are not merely for show, but will form the basis for formulating policies and strategic roadmaps.

The minister’s directives also include providing 50-year licenses for pumped storage projects, determining wheeling charges within 30 days, categorizing and resolving Power Purchase Agreement (PPA) disputes, and establishing a license performance dashboard to monitor progress.