The Nepal Electricity Authority (NEA), the state-owned power utility, has extended the commercial operation dates (RCOD) for 27 hydropower projects, ensuring the generation of 540.47 megawatts of electricity. This decision, made on Monday, October 5, 2026, follows an evaluation of projects that had signed Power Purchase Agreements (PPAs) but failed to meet their original completion deadlines.
The NEA classified a total of 218 hydropower projects into four distinct groups—’A’, ‘B’, ‘C’, and ‘D’—based on their physical progress, RCOD status, and the obligations of their promoters under the PPA. The RCOD extensions were specifically processed for projects in groups ‘A’ and ‘B’ that had submitted the necessary documentation and evidence.
Minister of Energy, Water Resources, and Irrigation, Birajbhakta Shrestha, affirmed the government’s commitment to facilitating genuine investors rather than creating problems for the private sector. He emphasized that decisions regarding RCOD extensions are developed through clear criteria and an institutional system, not based on individual discretion.
Facilitating Investment and Accountability
This new classification system and the subsequent RCOD extensions are designed to distinguish between projects genuinely affected by unforeseen circumstances and those that have made little progress over extended periods. The initiative aims to streamline private sector investment in the energy sector and foster greater accountability in project construction.
The NEA’s board of directors initially decided to implement this project classification system with clear criteria on Asar 32, 2082 (BS). Group ‘A’ projects are those that have fulfilled their basic obligations, while Group ‘B’ includes projects facing delays due to the NEA’s transmission structure construction, force majeure events, or those that have achieved at least 25 percent physical progress.
Conversely, Group ‘C’ projects are those that have not completed essential requirements such as production licenses, financial arrangements, or land management, or have less than 25 percent physical progress by their RCOD expiry. Group ‘D’ comprises projects that have failed mandatory obligations or have had their survey or production licenses revoked.
Currently, 320 hydropower projects with a combined capacity of 8,292 megawatts are in various stages of construction across Nepal. Among these, 150 projects with a capacity of 4,491 megawatts fall under Group ‘A’, and 68 projects with 1,420 megawatts are in Group ‘B’. The remaining projects are categorized into Groups ‘C’ and ‘D’.
Many hydropower projects in Nepal have faced delays over the years due to factors such as political instability, prolonged conflict, policy uncertainties, delays in transmission line construction, environmental clearances, forest area permits, land acquisition issues, and local disputes.
Looking Ahead
Projects categorized under Group ‘B’ will undergo regular monitoring by the NEA’s Electricity Trade Department. The department will issue necessary directives to ensure timely project completion and oversee their implementation. There is also a provision to reclassify projects within a maximum of six months if required.
Minister Shrestha has also instructed the relevant bodies to regularly monitor hydropower project licenses. The government plans to open Power Purchase Agreements (PPAs) for projects under 100 megawatts immediately, encourage private sector participation in electricity trade and transmission line construction, and resolve legal complexities related to forest and environmental regulations.
This year, the government has allocated Rs 70 billion for the construction of transmission lines. Nepal aims to increase its per capita electricity consumption from 450 to 1500 kilowatt-hours within the next decade. Furthermore, strict directives have been issued to prioritize disaster-resilient safety standards in the planning of future hydropower projects, especially in light of recent floods and landslides.
While Minister Shrestha’s initiative was cited in some reports for the RCOD extensions, he also stated that such decisions are based on clear criteria and institutional systems, not individual discretion. The precise interplay between ministerial initiative and established institutional processes remains to be fully clarified.
