NEPSE trading

Top
·

By Dipesh Ghimire

Private Investment in Nepal’s Energy Sector Crosses NPR 13 Trillion, Report Shows

Private Investment in Nepal’s Energy Sector Crosses NPR 13 Trillion, Report Shows

Private sector investment in Nepal’s energy sector has reached NPR 13.10 trillion, highlighting the scale of private capital mobilised in hydropower and related infrastructure over the past decades. The figure comes from a special study conducted by the Independent Power Producers’ Association Nepal (IPPAN), marking the first time such a comprehensive assessment of private investment in the energy sector has been carried out.

According to IPPAN, the study was undertaken to quantify how much capital the private sector has committed to Nepal’s power industry, an area traditionally viewed as high-risk due to long gestation periods, regulatory uncertainty and financing challenges. The findings, released on the occasion of IPPAN’s 26th anniversary, underscore the growing role of private developers in shaping the country’s energy landscape.

Banks as the Backbone of Energy Financing

The report reveals that commercial banks and financial institutions account for NPR 8.70 trillion of the total investment in the form of loans. This indicates that Nepal’s banking system has been the primary engine supporting hydropower development, often extending long-term credit despite liquidity pressures and regulatory constraints.

The remaining investment has been made by private developers as equity capital, reflecting significant risk exposure taken by entrepreneurs and investors. Analysts note that such a high level of equity participation suggests strong long-term confidence in Nepal’s hydropower potential, even though returns are often delayed due to construction timelines and power purchase agreement structures.

First Comprehensive Mapping of Private Energy Capital

IPPAN officials say this is the first systematic attempt to calculate total private sector exposure in the energy sector. Until now, discussions around investment were largely based on project-by-project estimates rather than an aggregated national picture. By consolidating data across operational, under-construction and pipeline projects, the study provides a clearer understanding of the financial scale involved.

Energy experts say the findings help explain why policy stability and financial sector coordination have become increasingly critical. With trillions of rupees tied up in energy assets, even small regulatory changes can have wide-ranging implications for banks, developers and the broader economy.

Implications for Financial Stability

The heavy involvement of banks also raises questions about sectoral concentration risk. A large portion of bank lending is now linked to hydropower projects, making the performance of the energy sector closely intertwined with financial system stability. Delays in project completion, cost overruns, or power evacuation bottlenecks could therefore have spillover effects on banks’ balance sheets.

At the same time, the report highlights how private investment has reduced the fiscal burden on the government, allowing large-scale power generation to expand without excessive reliance on public funds. Policymakers view this as a positive shift, provided risks are managed effectively.

Confidence Amid Structural Challenges

Despite persistent challenges such as transmission constraints, seasonal demand fluctuations and payment delays, private investment continues to flow into the energy sector. IPPAN attributes this to Nepal’s long-term electricity demand growth, export potential to neighbouring countries, and policy commitments toward renewable energy.

Industry insiders say the NPR 13.10 trillion figure is not just a measure of money invested, but also of institutional confidence built over years of regulatory evolution and private-sector participation.

The report is expected to influence future policy debates on power sector financing, bank exposure limits and investment facilitation. IPPAN has urged the government and regulators to recognise the scale of private capital already committed and to ensure predictable policies, timely project approvals and improved transmission infrastructure.

As Nepal positions itself as a regional energy exporter, the findings serve as a reminder that private investors and banks have already placed substantial financial bets on the sector’s success. How effectively the country manages these investments may determine not only the future of its energy industry, but also the resilience of its broader financial system.

Related Blogs

Finance Ministry Sets Three-Year Limit on Multi-Year Project Funding Commitments
Top

3 min read

Finance Ministry Sets Three-Year Limit on Multi-Year Project Funding Commitments

Finance Ministry Sets Three-Year Limit on Multi-Year Project Funding Commitments The Ministry of Finance, Nepal has introduced a new policy limiting the funding approval period for multi-year projects to a maximum of three fiscal years. By issuing the “Multi-Year Project Standards, 2082,” the ministry has sought to bring greater discipline and predictability to public investment management. According to the new standards, funding commitments for multi-year projects will generally remain valid for up to three financial years. However, exceptions have been made for national pride projects and large-scale infrastructure initiatives whose contract periods exceed three years. In such cases, funding approval may be extended in line with project requirements and cost structures. The ministry has also made it clear that funding approvals will automatically become inactive if procurement processes are not initiated within the same fiscal year in which approval is granted. Officials say this provision aims to discourage delays and prevent projects from remaining inactive despite having secured budgetary commitments.

Dipesh Ghimire

·

4 Feb, 2026

High-Level Panel Urges Capital Expansion and Structural Reform for Nepal Stock Exchange
Top

4 min read

High-Level Panel Urges Capital Expansion and Structural Reform for Nepal Stock Exchange

High-Level Panel Urges Capital Expansion and Structural Reform for Nepal Stock Exchange A high-level committee formed to restructure the Nepal Stock Exchange (NEPSE) has concluded that increasing the exchange’s paid-up capital is essential for its long-term sustainability and competitiveness. The 126-page report, prepared under the coordination of former Nepal Accounting Board chairperson Prakash Jung Thapa, was made public by the Ministry of Finance, Nepal on Tuesday. The report states that although the Securities Market Operation Regulation, 2007 requires a minimum paid-up capital of NPR 3 billion for a secondary market operator, NEPSE is currently operating with only NPR 1 billion. According to the committee, this gap has limited the exchange’s ability to modernize its services and compete with regional and international markets. The committee has warned that without sufficient capital, NEPSE cannot make the necessary investments in technology, human resources, infrastructure, research, and service expansion. To address this, it has recommended issuing bonus shares to immediately raise paid-up capital to NPR 3 billion. If additional funding is required in the future, the report suggests mobilizing resources through rights shares or fresh public offerings. Analysts believe this recommendation reflects growing concern over NEPSE’s weakening institutional capacity. In recent years, the exchange has struggled to keep pace with technological change, while neighboring markets have invested heavily in automation, surveillance, and data systems. As a result, Nepal’s capital market has remained relatively small and less attractive to foreign investors. The report has also highlighted weaknesses in NEPSE’s ownership and governance structure. At present, the Government of Nepal holds 58.66 percent ownership, while the remaining shares are held by public and financial institutions. The committee argues that this structure has reinforced bureaucratic control and limited managerial flexibility. To address this, the panel has proposed partial divestment and the introduction of strategic partners. However, it has ruled out full privatization, warning that complete government withdrawal could weaken small investors’ confidence, increase the risk of monopoly, and undermine market self-regulation. Instead, it recommends maintaining partial state ownership while gradually reducing government stakes. Under the proposed model, strategic partners may be allowed to hold between 15 and 25 percent ownership, with a mandatory lock-in period of at least ten years. The report states that such partners should be selected from leading global stock exchanges with at least 20 years of experience and membership in the World Federation of Exchanges (WFE).

Dipesh Ghimire

·

4 Feb, 2026

Nepal Strengthens Cyber Defenses as Digital Banking Risks Continue to Rise
Top

3 min read

Nepal Strengthens Cyber Defenses as Digital Banking Risks Continue to Rise

Nepal Strengthens Cyber Defenses as Digital Banking Risks Continue to Rise As Nepal’s digital financial ecosystem expands rapidly, concerns over cyber threats and data security are becoming increasingly prominent. Against this backdrop, the Nepal Bankers Association (NBA), in collaboration with Visa, organized a national-level workshop in Kathmandu aimed at strengthening the country’s cyber resilience. The event, titled “Strengthening Cybersecurity Resilience in Nepal,” was held on Magh 14 and brought together key stakeholders from across the financial and security sectors. The workshop was organized at a time when digital payments, mobile banking, and online transactions are growing at an unprecedented pace. While these developments have improved financial access and efficiency, they have also increased Nepal’s exposure to cyber fraud, data breaches, and digital crimes. Organizers said the program was designed to help institutions better understand emerging threats and improve their preparedness. High-level representatives from government agencies, regulatory bodies, security institutions, banks, financial companies, and international development partners participated in the event. According to the organizers, this broad participation reflected a shared recognition that cybersecurity is no longer a technical issue alone but a national priority linked to economic stability and public trust. The inaugural session was attended by officials from the Ministry of Communication and Information Technology, the cyber security directorate of the Nepal Army, Nepal Rastra Bank, and the International Finance Corporation (IFC). Their presence highlighted the growing importance of inter-agency coordination in protecting Nepal’s digital economy.

Dipesh Ghimire

·

4 Feb, 2026

IPPAN Urges Policy Reform on Rights Share Issuance to Accelerate Hydropower Development
Top

3 min read

IPPAN Urges Policy Reform on Rights Share Issuance to Accelerate Hydropower Development

IPPAN Urges Policy Reform on Rights Share Issuance to Accelerate Hydropower Development The Independent Power Producers' Association, Nepal (IPPAN) has called on the government to remove the requirement that hydropower projects must demonstrate at least 20 percent financial progress before issuing rights shares. The association argues that the existing provision has become a major structural barrier to investment and has slowed down the pace of project development across the energy sector. On Tuesday, an IPPAN delegation led by Senior Vice President Mohan Kumar Dangi submitted a memorandum to Energy Ministry Secretary Chiranjivi Chataut and Chairperson of the Electricity Regulatory Commission Ram Prasad Dhital. The delegation emphasized that the current regulation has created practical difficulties in mobilizing both equity and debt financing for new projects.

Dipesh Ghimire

·

4 Feb, 2026

International Support Strengthens Nepal’s Election Management, but Raises Questions on Long-Term Capacity
Top

3 min read

International Support Strengthens Nepal’s Election Management, but Raises Questions on Long-Term Capacity

International Support Strengthens Nepal’s Election Management, but Raises Questions on Long-Term Capacity Nepal’s upcoming House of Representatives election, scheduled for Falgun 21, is being backed by logistical, financial, and technical assistance from India, Japan, and the development partner United Nations Development Programme (UNDP). According to the Ministry of Finance, Nepal, this international support is expected to play a key role in ensuring smooth election management and strengthening administrative efficiency. One of the major components of this assistance is India’s provision of vehicles for election operations. The Ministry of Home Affairs had initially requested 750 vehicles, considering the geographical challenges and security requirements across the country. After reviewing practical needs, the number was revised to 650. So far, India has delivered 538 vehicles in different phases, mainly in the form of cabin pickup vans, which are being used for transportation, logistics, and field coordination.

Dipesh Ghimire

·

4 Feb, 2026

Small and Mid-Level Investors Drive Margin Loan Growth, but Market Power Remains Concentrated
Top

3 min read

Small and Mid-Level Investors Drive Margin Loan Growth, but Market Power Remains Concentrated

Small and Mid-Level Investors Drive Margin Loan Growth, but Market Power Remains Concentrated Nepal’s stock market is witnessing a gradual shift in participation, with small and mid-level investors becoming increasingly active. Recent data published by Nepal Rastra Bank shows that margin lending in the range of NPR 2.5 million to NPR 10 million has recorded the highest growth in the first six months of the current fiscal year 2082/83. This trend reflects a growing willingness among ordinary investors to re-enter the market through bank financing. According to the central bank’s report, loans between NPR 5 million and NPR 10 million increased by 12.8 percent, while those between NPR 2.5 million and NPR 5 million rose by 10.3 percent. Loans below NPR 2.5 million also grew by 7.9 percent. Analysts view this as a sign that retail and mid-tier investors are regaining confidence after a prolonged period of market uncertainty and subdued trading activity.

Dipesh Ghimire

·

4 Feb, 2026

Excess Liquidity Persists as Credit Demand Remains Weak in Nepal’s Banking System
Top

4 min read

Excess Liquidity Persists as Credit Demand Remains Weak in Nepal’s Banking System

Excess Liquidity Persists as Credit Demand Remains Weak in Nepal’s Banking System Despite a continued rise in deposits, Nepal’s banking system has failed to translate abundant liquidity into productive credit expansion in the current fiscal year. Data released by Nepal Rastra Bank show that while banks and financial institutions are flush with funds, private sector credit demand remains subdued, deepening the challenge of excess liquidity management and slowing domestic economic momentum. The central bank notes that interest rates have fallen to historically low levels this fiscal year, a condition that would normally encourage borrowing and investment. Anticipating surplus liquidity, Nepal Rastra Bank issued bonds worth NPR 200 billion in the month of Poush alone to absorb excess funds from the system. However, even after these interventions, pressure on interest rates has not fully eased, suggesting that liquidity absorption measures have been insufficient relative to the scale of surplus funds.

Dipesh Ghimire

·

3 Feb, 2026

Credit Growth Slows Despite Ample Liquidity, Raising Concerns Over Economic Recovery
Top

3 min read

Credit Growth Slows Despite Ample Liquidity, Raising Concerns Over Economic Recovery

Credit Growth Slows Despite Ample Liquidity, Raising Concerns Over Economic Recovery Nepal’s banking data for the second quarter of the current fiscal year point to a continuing slowdown in private sector credit expansion, underlining the fragile state of domestic economic activity. Figures released by Nepal Rastra Bank show that lending to the private sector has grown by only 3.6 percent by mid-January, adding NPR 197.47 billion and taking the total outstanding credit to NPR 5,695.17 billion. The pace of growth remains noticeably weaker than policymakers had anticipated at the start of the fiscal year.

Dipesh Ghimire

·

3 Feb, 2026

Strong External Buffers Mask a Sluggish Domestic Economy, Central Bank Data Shows
Top

2 min read

Strong External Buffers Mask a Sluggish Domestic Economy, Central Bank Data Shows

Strong External Buffers Mask a Sluggish Domestic Economy, Central Bank Data Shows Nepal’s economy presents a tale of two contrasting realities, according to the six-month review of the current fiscal year released by Nepal Rastra Bank. While external sector indicators have improved markedly—easing fears of balance-of-payments stress—the pace of domestic economic activity remains slower than expected, raising concerns about investment, production, and job creation. On the surface, macroeconomic stability appears to be returning. Inflation has eased significantly, foreign exchange reserves are at historically comfortable levels, and remittance inflows continue to surge. These developments suggest that the economy has moved away from the turbulence of recent years, when high inflation, liquidity shortages, and external payment pressures dominated policy discussions.

Dipesh Ghimire

·

3 Feb, 2026

Inflation Falls Sharply as Food Prices Ease, but Cost Pressures Persist in Services and Wages
Top

3 min read

Inflation Falls Sharply as Food Prices Ease, but Cost Pressures Persist in Services and Wages

Inflation Falls Sharply as Food Prices Ease, but Cost Pressures Persist in Services and Wages Nepal’s inflationary pressure continued to ease in mid-January (Poush 2082), with annual point-to-point consumer inflation dropping to 2.42 percent, according to Nepal Rastra Bank. This marks a significant decline from 5.41 percent recorded during the same period last year, signaling a notable improvement in price stability amid subdued domestic demand and relatively stable supply conditions. The sharp slowdown in inflation has been largely driven by falling food prices. During the review month, inflation in the food and beverage group turned slightly negative at –0.09 percent, compared to a steep 7.67 percent rise a year earlier. The reversal suggests that easing pressure on essential commodities has played a decisive role in pulling down overall inflation, offering temporary relief to households that had faced prolonged price shocks in previous years.

Dipesh Ghimire

·

3 Feb, 2026