Nepal targets 28,500 MW electricity production with Rs 6.5 trillion investment

KATHMANDU, JANUARY 5: An estimated investment of Rs 6.5 trillion is required to achieve the government’s target of producing 28,500 megawatts (MW) of electricity. Of this amount, Rs 4 trillion is expected to remain within the country.

This was revealed during the funding management agreement signing ceremony held yesterday for the 49.95 MW Danakhola Hydropower Project, promoted by Lalupate Hydropower Company, on Friday. The project is located in Nasong Rural Municipality-2, Manang district.

Speaking at the event, Minister for Energy, Water Resources, and Irrigation, Deepak Khadka, emphasized the government’s commitment to advancing the energy sector through private-sector collaboration.

Ganesh Karki, President of the Independent Power Producers' Association, Nepal (IPPAN), highlighted that substantial investment in the power sector would significantly benefit the national economy. He noted that Rs 4 trillion would need to be invested over the next decade to procure construction materials such as cement and iron rods and to generate employment in the hydropower sector. This expenditure, he argued, would stimulate economic growth.

Karki also pointed out that the long-term inter-country power trade agreement with India, allowing for the export of 10,000 MW, and the deal to export 40 MW to Bangladesh, were milestones for Nepal’s power trade. Additionally, plans for exporting an extra 15,000 MW were recently introduced, he added.

Karki remarked that the unveiled roadmap for producing 28,500 MW of electricity within the next 10 years signals a promising future for Nepal's energy sector.

Sanima Bank is the primary investor in the Danakhola Hydropower Project, which is scheduled for completion by October 2028. The funding management agreement was signed on Friday by Sanima Bank’s Chief Executive Officer, Nischal Raj Pandey, and Lalupate Hydropower Company’s Chairman, Mohan Kumar Dangi.

Chairman Dangi disclosed that the project’s total investment amounts to Rs 9.96 billion.

Currently, Nepal produces approximately 2,800 MW of hydroelectricity, with the private sector contributing 2,100 MW. The private sector is developing over 169 hydropower projects, 91 of which are listed on the Nepal Stock Exchange, attracting investment from more than four million individuals.

Moreover, hydropower projects with a combined capacity of 3,200 MW are under construction, and projects totalling 3,500 MW are in the process of financial closure. Additional projects with a cumulative capacity of 12,000 MW are awaiting Power Purchase Agreements (PPA) with the government. The private sector is also conducting feasibility studies on projects totalling 12,000 MW.

A study by the Water and Energy Commission reveals that Nepal has the potential to generate 120,000 MW of hydroelectricity. Furthermore, research indicates the country can produce 30,000 MW of solar power. Other studies suggest Nepal could achieve over 200,000 MW of electricity production during the rainy season.