IPPAN Submits Memorandum to PM Oli, Opposes ‘Take and Pay’ Policy

The Independent Power Producers’ Association Nepal (IPPAN) has submitted a formal memorandum to Prime Minister KP Sharma Oli, urging the government to withdraw the controversial ‘Take and Pay’ clause introduced in the fiscal year 2082/83 budget.

As part of their pre-announced protest campaign, a delegation led by Acting President Mohan Kumar Dangi met PM Oli at the Office of the Prime Minister and Council of Ministers in Singha Durbar on Friday. The memorandum warns that if the new power purchase agreement (PPA) model is not revoked, IPPAN will be compelled to escalate its protest.

In response, Prime Minister Oli acknowledged the concerns and emphasized the need for an in-depth discussion with energy entrepreneurs. He instructed his secretariat to schedule a meeting by Sunday or Monday to address the matter further.

The ‘Take and Pay’ provision was announced on May 29, 2025 (Jestha 15, 2082), during the presentation of the new fiscal budget. The policy mandates that future PPAs for hydropower projects, especially Run-of-River (RoR) types, will only be made under a ‘Take and Pay’ model—meaning the Nepal Electricity Authority (NEA) will purchase electricity only if needed, without any purchase guarantee.

IPPAN has strongly opposed this, arguing that such a policy deters private investment. Unlike the current ‘Take or Pay’ model, which assures the purchase of all electricity produced, ‘Take and Pay’ offers no security for developers. Banks and financial institutions are unlikely to invest in projects without guaranteed returns, and promoters also shy away from uncertain markets.

Following three weeks of consultations with various stakeholders, and seeing no government action, IPPAN launched the first phase of its protest on June 20, 2025 (Asar 6, 2082).

Speaking to media, Mohan Kumar Dangi, who also coordinates the protest committee, confirmed that the memorandum was submitted on the first day of the movement. The campaign includes delivering memorandums to the Prime Minister, Finance Minister, and Energy Minister, launching SMS campaigns targeting the Speaker of the House of Representatives and party whips, and issuing joint statements with private sector associations.

The memorandum further highlights that over 350 projects with a combined capacity of 17,117 megawatts could be halted, and an investment of NPR 662.2 billion already made in feasibility studies could be lost.

IPPAN claims that this budget provision contradicts the government’s 10-year energy roadmap (Energy Development Plan 2081), which aims to generate 28,500 MW of electricity and export 15,000 MW to India and Bangladesh.

Currently, the NEA signs ‘Take or Pay’ PPAs that guarantee the purchase of electricity from completed hydropower projects. The new model, however, removes that assurance, thereby posing a serious risk of capital flight from Nepal’s energy sector.

IPPAN warned that a withdrawal of private investors, who helped Nepal eliminate power shortages by producing 3,000 MW of electricity in a short span, could lead to a new energy crisis in the country.