Nepal Hydropower Hub · Civilopedia

Comprehensive Hydropower
Development Reference

Authoritative insights sourced from NEA, DoED, and MoFE — from survey license to asset handover.

3,591 MWInstalled Capacity

14.80 NPRMax Winter Tariff

83,000 MWTheoretical Potential

30–35 YrsLicense Term

10,300+ MWPPAs Signed

Project Development

Development Lifecycle DoEDMoFE

10-step process from company registration through survey license, environmental approval, PPA, construction, and final asset handover to GoN.

Project Development

Project Development Lifecycle DoED MoFE

01 — REGISTRATION

Company Registration

Register at CRO, DOI, and Tax Office. FDI approval needed if foreign investment involved. Prepare MOA/AOA and director citizenship certificates.

02 — SURVEY LICENSE

Survey License (DoED)

Apply to DoED with project details, maps, and water resource data. DoED field visit conducted. Valid up to 5 years; typically issued within 30 days if application is complete.

03 — ENVIRONMENTAL

Feasibility & Environmental Study

IEE for projects ≤50 MW; full EIA for projects >50 MW. EIA approved by MoFE; IEE by concerned ministry. Process takes 6–12 months. Public hearing mandatory for projects >5 MW.

04 — PPA

PPA Execution (NEA)

Agreement with NEA based on approved rates. Requires technical feasibility, approved IEE/EIA, and bank LOI. NEA is sole buyer of electricity in practice.

05 — APPROVALS

Additional Clearances

Forestry clearance (MoFE/DFO), National Parks clearance (DNPWC), Road Dept access, local government recommendations. Required if project affects protected areas.

06 — FINANCING

Financial Closure

Typical debt-equity ratio: 70:30. Demonstrate minimum 30% equity at application stage. Bank commitment letters, cost estimates, and implementation schedule required.

07 — GENERATION LICENSE

Generation License (DoED)

Issued for 30–35 years (max 50). Issued within 120 days of complete application. Separate licenses required for generation, transmission, and distribution.

08 — CONSTRUCTION

Construction Phase

Physical work must begin within 3 months of license issue. Follow DoED standards and EIA mitigation commitments. DoED monitors construction compliance.

09 — OPERATION

Power Generation & Royalty

Generate and sell power under PPA. Pay capacity royalty and energy royalty to DoED. Annual royalty audit by DoED. Royalty distributed: 50% local unit, 25% area-based, 25% population-based.

10 — HANDOVER

Asset Handover to GoN

After license expiry, all assets revert to Government of Nepal for free (Right of Reversion). Foreign-owned (>50%) projects: mandatory free handover. Former licensees may negotiate continued operation.

Source: DoED Electricity Act 2049 & Licensing Guidelinesdoed.gov.np ↗

Nepal Electricity Authority

NEA — Key Statistics FY 2024/25

Generation capacity, financial performance, transmission infrastructure, and power trade data from NEA's latest annual report.

Nepal Electricity Authority

NEA — Key Statistics & Overview NEA FY 2024/25

Generation & Capacity

Installed Capacity (FY 2024/25)3,591 MW

Capacity Added in FY 2024/25434 MW

— NEA Subsidiaries contribution153.5 MW

— Private sector (IPP) contribution280.5 MW

Hydropower share of total capacity~95%

Solar installed107 MW

Thermal (diesel)53 MW

Total electricity production (FY 2024)12,071 GWh

Domestic consumption (FY 2024/25)11,319 GWh

YoY domestic consumption growth+10.7%

Financial Performance (FY 2024/25)

Revenue from electricity salesNPR 125.27B

— Of which from exportsNPR 17.47B

Total incomeNPR 138.87B

Profit before taxNPR 9.06B

YoY profit change−37.32%

Total operating expensesNPR 97.79B

Electricity purchase costsNPR 77.10B

Total assetsNPR 684.91B

Revenue growth (electricity sales)+8.46%

Total customers5.71 million

Transmission Infrastructure

Total transmission line length6,760 CKm

— 132 kV lines4,136 km

— 220 kV lines1,213 km

— 400 kV lines644 km

— 66 kV lines514 km

Transmission lines under construction2,034 CKm

Total substation capacity14,123 MVA

Substations under construction6,338.5 MVA

Capacity added (FY 2024/25)253 CKm

Power Trade & Future Targets

PPAs signed total>10,300 MW

Daily electricity export (avg)~500 MW

Daily electricity import (dry season)500–700 MW

Export revenue (FY 2024/25)NPR 17.47B

Target installed capacity by 2028/29~10,000 MW

Target export by 203515,000 MW

Projects under DoED construction review109 projects / 11,651 MW

Solar bid rate range (2024)NPR 4.99–6.00/unit

Solar max PPA ceilingNPR 5.94/unit

Solar PPA term25 years (fixed rate)

Note: NEA was established on 16 August 1985 (Bhadra 1, 2042) under the Nepal Electricity Authority Act, 1984. It is the primary generator, transmitter, and retail distributor of electric power under GoN supervision. NEA also acts as the de facto sole purchaser of all electricity generated inside Nepal from IPPs.

Source: NEA Annual Report FY 2024/25nea.org.np ↗

NEA Power Purchase Agreement

PPA Rates NEAERC 2026

ROR, PROR, Storage and Solar power purchase rates. Includes new ERC February 2026 directive for reservoir-based projects.

NEA Power Purchase Agreement

Power Purchase Rates NEA ERC 2026 Update

New ERC Directive — February 2026

🔔

ERC Directive on Reservoir-Based Projects (2026): The Electricity Regulatory Commission (ERC) has issued new differentiated PPA rates for reservoir-based hydropower projects. For projects up to 100 MW, the cap is now NPR 14.80/unit (winter) and NPR 8.45/unit (monsoon). For projects above 100 MW, rates are determined based on actual project costs. This replaces the previous uniform rate of NPR 12.40/NPR 7.10. The ERC is now the authoritative body for determining PPA rates, while NEA applies the approved rates.

ROR Rates — Up to 100 MW (Effective 2074/01/14 · 3% annual escalation for 8 years)

Option	Season	Period	Rate (Rs./kWh)	Min. Dry Energy
Option 1 6 months each	Wet	Jestha 16 – Mangsir 15	4.80	30%
Option 1 6 months each	Dry	Mangsir 16 – Jestha 15	8.40	30%
Option 2 8 + 4 months	Wet	Baisakh – Mangsir	4.80	15%
Option 2 8 + 4 months	Dry	Poush – Chaitra	8.40	15%

PROR Peak Hour Tiers — Dry Season (Up to 100 MW)

Season	Time	Daily Peak Hours	Rate (Rs./kWh)	Min. Dry Energy
Dry Mangsir 16 – Jestha 15	Peak hours	1 to <2 hrs	8.50	30%
		2 to <3 hrs	8.80
		3 to <4 hrs	9.40
		4 to 6 hrs	10.55
	Non-peak	—	4.80
Wet Jestha 16 – Mangsir 15	All hours		4.80	—

Reservoir / Storage Project Rates

Season	Period	Old Rate (Rs./kWh)	New Rate ≤100 MW (Rs./kWh)	Min. Dry Energy
Dry	Mangsir 16 – Jestha 15	12.40	14.80 (ERC 2026)	35%
Wet	Jestha 16 – Mangsir 15	7.10	8.45 (ERC 2026)	—

Storage Notes: If wet season energy >50%, rate decreases by the excess %. If dry energy <35%, treated as PROR. Active storage volume ≥ 15 days design discharge; dead storage designed to resist sedimentation for ≥50 years. For multipurpose storage: flat rate = (Dry% × 12.40) + (Wet% × 7.10). For projects >100 MW, ERC now determines PPA rate based on actual project costs.

Solar PPA (Competitive Bidding, 2024)

Parameter	Detail
Maximum base tariff ceiling	NPR 5.94 / unit
Bid range received (Oct 2024)	NPR 4.99 – 6.00 / unit (~70 companies)
Expected average tariff	≤ NPR 5.60 / unit
PPA duration	25 years (fixed rate)
Grid substations (max per developer)	Up to 10 MW each; up to 150 MW total
Distribution substations (33/11 kV)	Up to 1 MW per substation
Construction period (projects <10 MW)	18 months from PPA date
Construction period (projects >10 MW)	24 months from PPA date

Source: NEA PPA Rate Board Decision 2074 + ERC Directive 2026nea.org.np ↗

Department of Electricity Development

DoED — Licensing Framework DoED

Survey license and generation license process, document requirements, royalty structure, and fiscal incentives for hydropower projects.

Department of Electricity Development

DoED — Licensing Framework DoED

The Department of Electricity Development (DoED) was established on 16 July 1993 under the Ministry of Water Resources to develop and promote Nepal's electricity sector and attract private sector investment. It operates under the Ministry of Energy, Water Resources, and Irrigation (MoEWRI) and is the primary authority for issuing survey licenses, generation licenses, transmission licenses, and distribution licenses.

Licensing Process Flow

Pre-Application Consultation

Engage DoED for guidance. Prepare project concept, maps, water resource data.

Survey License Application

Submit to DoED with company docs, MOA/AOA, financial capacity, technical proposal.

DoED Review & Field Visit

DoED conducts site visit, stakeholder consultation, issues public notice (35-day objection window).

Survey License Issued

Typically within 30 days. Valid 2–5 years. Allows feasibility & IEE/EIA studies.

Generation License Application

Submit DPR, approved IEE/EIA, financial closure evidence, PPA, community consent.

Generation License Issued

Within 120 days of complete application. Valid 35 years (extendable to 50). Physical work within 3 months.

Survey License Requirements

Certificate of Incorporation (OCR)
MOA / AOA of the applicant company
Citizenship certificates of all directors
Board resolution for application submission
Financial capability statement / bank guarantees
Technical proposal with river system, location, capacity
Topographic maps of project site
Water source data and outcomes of water usage
Application fee (15% of prescribed license fee)

Generation License Requirements

Valid Survey License certificate (certified copy)
Detailed Project Report (DPR) per DoED guidelines
Approved IEE or EIA report
Signed Power Purchase Agreement (PPA) with NEA
Financial closure evidence (30% equity minimum)
Land ownership/lease certificates (survey numbers)
Affected community consent letters
Local government recommendation letters
Application fee (33.33% of prescribed license fee)

License Timelines & Validity

Survey License: issued within 30 days of complete application
Survey License validity: 2 years (extendable up to 5 years)
Generation License: issued within 120 days
Generation License term: 35 years (max 50)
License renewal: application at least 1 year before expiry
Physical construction: must begin within 3 months
GoN cannot nationalize assets during license period
100% foreign investment permitted in hydropower sector
IBN jurisdiction: projects above 500 MW (200 MW for some)

Royalty Structure — Collected by DoED

Capacity Royalty

Period	Rate per Installed kW/year
First 15 years of operation	NPR 100 / kW
After 15 years	NPR 1,000 / kW

Rate escalates at 5% per year. Formula: Capacity Royalty Rate × (1 + 5/100)^year × Installed Capacity (kW). Applicable up to 1,000 MW capacity.

Energy Royalty

Period	% of Average Tariff / kWh
First 15 years of operation	2% of average tariff
After 15 years	10% of average tariff

Current indicative range: 1.75–4.75% of revenue, varying by project size and terms. Royalty distribution: 85% central government, 10% concerned province, 5% local government units.

Fiscal Incentives for Hydropower Projects

Incentive	Detail
Income tax holiday	100% exemption for first 10 years of commercial operation; 50% exemption for next 5 years
Custom duty	Nominal 1% duty on import of construction equipment
VAT exemptions	Zero VAT on machinery and equipment used for hydropower development (turbines, penstock pipes, EM/HM equipment not produced in Nepal)
VAT refund scheme	GoN returns NPR 0.5 crore per MW for VAT paid on engineering, transportation, and civil construction
Foreign investment	100% foreign ownership permitted; 100% equity repatriation allowed

Source: Electricity Act 2049, Electricity Rules 2050, DoED Guidelinesdoed.gov.np ↗

Ministry of Forests and Environment

MoFE — Environmental Clearance MoFE / DoE

EIA/IEE thresholds, MoFE approval process, forest and protected area clearances, and key environmental legislation.

Ministry of Forests and Environment

MoFE — Environmental Clearance Framework MoFE / DoE

The Ministry of Forests and Environment (MoFE) and its Department of Environment (DoE) are the primary authorities for granting EIA approval in Nepal under the Environment Protection Act 2076 (2019) and Environment Protection Rules 2077 (2020). IEE reports may be approved by the concerned sectoral ministry (e.g., MoEWRI for hydropower), while all EIAs must go to MoFE.

EIA / IEE Thresholds for Hydropower

<1 MW

Micro Hydro

No IEE/EIA required. Local government / Ward Office oversight. DoED permission still required.

1 – 50 MW

IEE Required

Initial Environmental Examination. Approved by concerned ministry (MoEWRI). Public consultation mandatory for projects >5 MW. Typically 3–6 months.

>50 MW

Full EIA Required

Environmental Impact Assessment. Must be approved by MoFE. Process: 6–12 months. In Protected Areas: EIA required above 10 MW.

EIA Approval Process (MoFE — for projects >50 MW)

🔍

Screening & Scoping

~2–4 weeks

📋

Terms of Reference (TOR) Approval

MoFE review

🏕️

Field Study & Baseline Data

~3–6 months

📢

15-Day Public Notice

National newspaper

🤝

Public Hearing

Project-affected VDC/Municipality

📨

EIA Report Submission to MoFE

30-day MoFE review notice

✅

Conditional / Final Approval

MoFE decision

🌲 Forest & Protected Area Clearances

Forest clearance required if project land falls under forest area — apply to Ministry of Forests (MoF) / Department of Forests (DoF)
Projects affecting National Parks / Wildlife Reserves / Conservation Areas / Buffer Zones require separate clearance from Department of National Parks and Wildlife Conservation (DNPWC)
In protected areas: EIA required for projects above 10 MW (stricter than standard 50 MW threshold)
Developer must pay forest mitigation / compensation costs
Tree planting ratio: 1:10 (1 tree removed → 10 trees planted as compensatory afforestation)
Governed by: Forest Act 2019, National Parks and Wildlife Protection Act 1973, Buffer Zone Management Rules 1996, Conservation Area Management Rules 1996, Directive on Acquired Land in Protected Areas 2024

🌊 Environmental Management Plan (EMP)

EMP implementation monitored by Ministry of Energy (MoEWRI) as concerned ministry
Developer must implement project strictly as per approved EIA/IEE report
If actual environmental impact exceeds approved EIA, DoED / concerned department issues directives for mitigation
Minimum environmental flow (e-flow) must be maintained in river downstream of diversion
Annual environmental monitoring report required
Community development programs as per agreed terms must be implemented
Local government recommendation letters required before construction

📄 Key Environmental Laws & Regulations

Environment Protection Act 2076 (2019) — primary legislation for EIA/IEE mandate
Environment Protection Rules 2077 (2020) — thresholds and procedures
Water Resources Act 2049 (1992) — water use for hydropower
Forest Act 2019 — forest area use and compensation
National Parks and Wildlife Protection Act 1973
Buffer Zone Management Rules 1996
Hydropower EIA Manual (MoFE, 2018) — guidance for EIA reporting

⏱️ Typical Environmental Clearance Timeline

IEE (≤50 MW): typically 3–6 months from submission
EIA (>50 MW): typically 6–12 months; controversial projects may take longer
Forest clearance: additional 2–4 months depending on area
Protected area clearance: additional 3–6 months
Start the IEE/EIA process immediately after survey license — do not wait for generation license application
IEE/EIA report must be submitted to DoED as part of generation license application
EIA scoping/TOR must be approved before transfer of survey license

Source: Environment Protection Act 2076, Environment Protection Rules 2077mofe.gov.np ↗

Legal & Regulatory

Legal Framework & Classifications DoEDERC

Hydropower classification tables, core Acts and Regulations, and regulatory body responsibilities.

Legal & Regulatory

Legal Framework & Classifications DoED ERC

Administrative Classification

Category	Capacity	Regulatory Body
Micro Hydro	<1 MW	Local Government / Ward Office
Small Hydro	1–10 MW	DoED (simplified process)
Medium Hydro	10–25 MW	DoED (standard process)
Large Hydro	25–500 MW	DoED / Cabinet approval
Mega Projects	>500 MW	Investment Board of Nepal (IBN)

Classification by Head (Nepal Context)

Type	Head Range
Very Low Head	Up to 15 m
Low Head	Below 60 m
Medium Head	60–150 m
High Head	150–350 m
Very High Head	>350 m

Head Classification (Dandaker & Sharma)

Type	Head
Low Head	<15 m
Medium Head	15–70 m
High Head	71–250 m
Very High Head	>250 m

Core Legal Framework

Act / Regulation	Year	Key Provisions
Electricity Act (2049)	1992	Primary legislation — licensing, GoN nationalization rights (Section 29), license transfer (Section 4), agreement mode (Section 35)
Electricity Rules (2050)	1993	Detailed procedures for survey/generation licenses (Rules 9–18), royalty schedule, license fees (Schedule 11)
Water Resources Act (2049)	1992	Regulates use of water resources for hydropower generation
Environment Protection Act (2076)	2019	Mandates EIA/IEE for development projects; prohibits construction without environmental clearance
Hydropower Development Policy	2001	Royalty structure, foreign investment rules, right of reversion, community benefit-sharing
Foreign Investment & Technology Transfer Act	2019	Regulates foreign investment; allows 100% ownership with repatriation rights
Public-Private Partnership & Investment Act	2019	Facilitates PPP modality for large hydropower projects
ERC Directive on Reservoir PPA	2026	New differentiated PPA rates for reservoir projects; ERC authorised to set rates, NEA applies them