NICCI urges government to reform hydropower, deepen energy ties with India

KATHMANDU: Nepal-India Chamber of Commerce and Industry (NICCI) has urged the government to reform the hydropower sector and strengthen energy cooperation with India.

During a courtesy meeting with Minister for Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, on Friday, NICCI called for simplified approval processes, clearer regulatory frameworks and improved inter-agency coordination to unlock Nepal’s hydropower potential and attract Indian investment. The chamber also recommended a strategic shift from a generation-first approach to one that gives equal priority to power trading and transmission infrastructure.

On the occasion, NICCI President Sunil KC said that regulatory uncertainty has deterred investors. “Without a predictable regulatory environment, Indian investment will not come to Nepal,” he said, adding that very little Indian capital has flowed into Nepal’s energy sector over the past two decades. “If we are serious about expanding hydropower and attracting Indian investment, Nepal must adopt a practical and investor-friendly approach.”

The chamber proposed the formation of a joint working group comprising the Ministry of Energy, Water Resources and Irrigation (MoEWRI), Department of Electricity Development, NICCI and the Ministry of Law, Justice and Parliamentary Affairs (MoLJPA) to tackle legal and regulatory hurdles. NICCI also urged the government to expedite long-pending electricity trading licences, include ‘take-or-pay’ clauses in power purchase agreements and address bottlenecks related to forest clearances, land acquisition and local-level approvals.

To deepen bilateral engagement, NICCI suggested organising 'Nepal–India Energy Forum' in New Delhi, with both governments acting as facilitators and private sector leading investment and project development. Minister Shrestha responded positively to the idea and agreed to continue coordination with the chamber.

Responding to private sector’s concerns, Minister Shrestha said the government is committed to reform. “We are positive about these demands and will work closely with NICCI and the private sector to remove bottlenecks and attract more Indian investment into Nepal’s energy sector,” he said. The minister added that a new electricity policy is being prepared and invited the private sector to submit suggestions accompanied by a clear implementation checklist.

The minister emphasised the need to align Nepal’s policies with state-level frameworks in India, Nepal’s primary energy market, and called for a participatory model with clearly defined roles for government and private actors to ensure energy security. He also proposed creating a broader stakeholder mechanism to correct inefficiencies and 'wrong practices' in both public and private sectors and to improve governance and accountability.

NICCI reiterated that both Nepal and India should play facilitative roles in promoting energy cooperation while ensuring the private sector remains at the forefront of investment and project delivery. The chamber said policy clarity and infrastructure development are now more important than ever as Nepal seeks to expand hydropower capacity and strengthen energy trade with its southern neighbour.

The NICCI delegation present at the meeting included Vice-President Kunal Kayal; Executive Members Batu Lamichhane, Ramesh Sharma and Uttam Bhlon Lama; Managing Director of Nepal SBI Bank, Ram Kumar Tiwari; NICCI Director General Keshab Man Singh; Director Marshal Rathour; Finance Head Nimesh Nepal; and Programme Consultant Kuber Chalise.