Government of Nepal has unveiled an ambitious plan to add 942 megawatts (MW) of electricity through new hydropower projects in the fiscal year 2025–26.
The commitment, part of a broader Rs. 86.1 billion budget allocated to the Ministry of Energy, Water Resources and Irrigation, underlines Nepal’s strategic pivot toward large reservoir-based hydroelectricity to meet both domestic and cross-border energy demands. With the nation’s current installed capacity standing at 4,800 MW, the upcoming investments aim to significantly scale up generation while deepening grid connectivity. The government has outlined a forward-looking blueprint focusing on energy security, sustainable resource management, and export-ready capacity, tapping into its vast river network for long-term hydro-based solutions.
Central to this strategy are major reservoir projects including Dudhkoshi (670 MW), Lower Seti, Budhigandaki, Upper Arun, Tamor, Kimathanka, and Arun. These projects will move into advanced stages such as investment structuring and construction groundwork. The government is also prioritising projects like Tamakoshi-5, Chainpur Seti, and Jagdulla, with accelerated timelines. Officials indicated that the detailed engineering design of the Karnali Chisapani Multipurpose Project will be completed in this fiscal cycle, while finalisation of its investment framework will follow. Similarly, the long-stalled Pancheshwor Multipurpose Project will see its Detailed Project Report (DPR) expedited, with diplomatic channels expected to support cross-border coordination.
To support this growth in generation, 732 kilometres of new double-circuit national transmission lines will be added to enhance energy flow and reliability. The government has also earmarked Rs. 13.18 billion for transmission and distribution infrastructure to remove bottlenecks in power evacuation, particularly for remote and under-electrified regions. In a bid to align with climate action and sustainable development goals, the government will promote the People’s Hydropower Programme under the Nepal Electricity Authority (NEA). The programme enables Nepali citizens to co-invest in viable hydro projects with high returns, fostering public ownership of energy assets and democratising green infrastructure development.
Beyond hydro, Nepal is widening its energy lens. A Rs. 2.33 billion provision will support solar, wind, and biogas energy initiatives. The government plans to incentivise battery storage for renewable energy integration, enabling grid access and purchase agreements for intermittent sources—paralleling those given to reservoir projects. With rural electrification still a development priority, authorities aim to complete remaining projects within two years to ensure reliable access across the country. In urban cores, ageing overhead lines will be gradually shifted underground, improving safety and system resilience.
To unlock export potential, key cross-border transmission lines—such as the Butwal–Gorakhpur, Inaruwa–Purnia, and Chameliya–Jauljibi—will be fast-tracked. Strategic diplomatic initiatives with neighbouring countries will continue, fostering energy trade that could convert Nepal into a net electricity exporter during surplus months. In a noteworthy policy innovation, industries that invest in building transmission lines from the national grid to their operational sites will be permitted to charge wheeling fees—marking a critical shift in industrial energy regulation.
Meanwhile, the irrigation sector is set for a parallel transformation. Rs. 8.5 billion has been allocated to expand and modernise irrigation systems, aiming to bring an additional 14,000 hectares of land under assured irrigation in 2025–26. Multipurpose infrastructure—including headworks, tunnels, powerhouses, and canal systems—will be constructed synchronously to avoid cost overruns and delays. Mega irrigation projects such as Babai, Rani Jamara Kulariya, Mahakali, and Praganna-Badkapath are expected to be completed within three years, while the Sikta and Mega Dang Valley projects will be accelerated. The Bheri–Babai Diversion Project has been allocated Rs. 2.7 billion to finalise key works within two years.
The government’s long-term goal includes delivering lift irrigation to 468,000 hectares within five years and constructing 63 kilometres of river embankments. It also plans to protect 270 hectares of vulnerable land from erosion, positioning the country to better withstand climate-related threats. Nepal’s water management strategy is set to be reshaped through the implementation of the River Basin Master Plan. This will include digitised monitoring of water levels, management of groundwater resources, and structured regulation of basin-wide usage to optimise long-term sustainability.
As part of disaster mitigation efforts, Rs. 5.59 billion has been reserved for flood and earthquake-damaged irrigation infrastructure, while electric cooking systems will be deployed in major urban centres to reduce reliance on biomass and LPG. The policy matrix reflects Nepal’s intention to emerge as a green energy hub in South Asia, aligning its hydropower roadmap with climate resilience, rural empowerment, and economic sovereignty. While implementation hurdles remain—from environmental clearances to financing and local stakeholder engagement—the energy and irrigation blueprint announced this year has potential to redefine the region’s infrastructure landscape.
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