KATHMANDU, May 29: The government has announced a major policy shift in electricity purchase agreements, scrapping the previous “take and pay” model and reinstating the “take or pay” system for hydropower projects.
Finance Minister Dr Swarnim Wagle made the announcement while presenting the national budget for fiscal year 2026/27, saying the change aims to provide relief and investment security to energy entrepreneurs.
Revised interest rate corridor system introduced
Under the revised system, the Nepal Electricity Authority will be obligated to purchase the generated electricity, regardless of demand fluctuations—an arrangement widely viewed as more favorable for private investors compared to the earlier policy.
The “take and pay” mechanism had been introduced during the tenure of former Finance Minister Bishnu Paudel, but had faced strong opposition from private sector developers, who argued it increased project risks and discouraged investment in the hydropower sector.
Energy stakeholders have welcomed the decision, saying it is expected to revive investor confidence and accelerate ongoing hydropower projects. The government has said the policy change is part of a broader effort to expand private sector participation and boost overall electricity generation in the country.
