Nepal's vast hydropower potential lay untapped for over a century, but that is finally changing. With a bold Energy Development Roadmap aiming to generate 28,500 MW of electricity by 2035 through a $46.5 billion investment plan, the country is setting its sights on becoming a regional energy powerhouse. In an exclusive interview with Sumit Bikram Rana of The Himalayan Dialogues, Ganesh Karki, President of the Independent Power Producers Association of Nepal (IPPAN), discusses the milestones, challenges, and opportunities shaping Nepal's hydropower journey. With decades of experience, Karki outlines how collaboration with India and other regional players can unlock Nepal'shydropower potential and drive economic transformation.

THT: Nepal has tremendous hydro resources potential, yet development has been slow over the last century. What do you think has held us back?

GK: Nepal has always had immense hydropower potential. We were the first country in Asia to establish a hydropower plant, the Pharping Hydropower Plant, back in 1911 with a capacity of 500 kilowatts. This should have set the stage for a thriving hydropower sector, but unfortunately, progress has been painstakingly slow. We failed to create sufficient domestic electricity demand for more than a hundred years or adopt an export-oriented approach.

The reasons for this stagnation are complex. Weak policy and regulatory frameworks, inadequate infrastructure development, and political instability often derailed long-term projects. However, in recent years, there has been a paradigm shift. Improved governance, better policies, and stronger collaboration between the private and public sectors-and crucially, with our neighbours like India-are starting to turn things around. Today, the narrative has shifted from "why can't we" to "how can we" regarding hydropower development.

THT: What milestones have shaped Nepal's hydropower journey in recent years?

GK: The real turning point came when we ended load-shedding in 2018. This was a huge psychological and practical boost for the nation, as uninterrupted electricity became a reality. Since the introduction of the Electricity Act in 1992, the private sector has made remarkable strides, contributing 80% of the country's current electricity production in just 33 years. This progress has culminated in a significant achievement: the successful connection of 3,300 MW of electricity to the national grid.

Two pivotal moments stand out. First, Sher Bahadur Deuba'svisit to India resulted in a 465 MW power purchase agreement, establishing a long-term energy trade framework. This agreement signified a shift from viewing electricity as a local resource to recognizing its regional potential. Second, under the leadership of Pushpa Kamal Dahal, the government laid out an ambitious vision to export 10,000 MW of electricity to India and Bangladesh over the next decade. These moments highlight how cross-border collaboration is critical to realizing Nepal's energy aspirations.

THT: The Government has recently presented an ambitious Energy Development Roadmap targeting 28,500 MW of electricity by 2035. What challenges and opportunities lie ahead in achieving Nepal's ambitious hydropower targets?

GK: Producing 28,000 MW in the next decade is a bold goal but requires substantial reforms. The challenges we face are significant but not insurmountable. First, our policy environment needs to be more investor-friendly. Licensing processes are cumbersome, often taking years, discouraging domestic and international investors. Second, attracting foreign investment requires clear policies that allow investors to bring in capital and repatriate their returns without unnecessary hurdles. Third, we must upgrade our transmission infrastructure to handle increased production and facilitate exports. Our hydropower potential will remain untapped without robust cross-border transmission lines-particularly with India.

Despite these challenges, the opportunities are immense. Internally, we must focus on expanding industrial use to absorb surplus electricity. Externally, India serves as our gateway to broader regional markets, including Bangladesh. India's role as a strategic partner is indispensable-not only as a consumer of our surplus electricity but also as a facilitator for access to other markets. Hydropower development has the potential to create thousands of jobs, curb brain drain, andattract investments from the Nepali diaspora. Moreover, the global push for green energy provides additional momentum.

THT: How has the private sector contributed to Nepal'senergy revolution?

GK: The private sector has become the backbone of Nepal'shydropower industry. Today, 80% of the country'shydropower is produced by independent power producers. What's remarkable is how small companies that began with modest investments have evolved into key players managing large-scale projects.

That said, the private sector's success depends heavily on government support. Simplifying financing policies and facilitating direct cross-border sales to India and beyond are essential. This will drive growth in the sector and deepen economic ties with our neighbours. Upgrading transmission infrastructure is another crucial element where the private sector can play a vital role.

THT: How does the hydropower sector address environmental and social concerns?

GK: Sustainability is at the core of what we do. Hydropower is inherently a clean energy source, but we go further by adhering to international standards like IFC and FMO guidelines for environmental and social impact assessments. For example, we install fish ladders to support aquatic ecosystems, undertake reforestation projects to offset ecological impact and implement community development programs to ensure local populations benefit from these projects.

Additionally, many of our projects are designed with cross-border ecological considerations, recognizing that river systems often traverse national boundaries, especially inIndia. This collaborative approach ensures that hydropower development respects environmental integrity while enhancing bilateral ties.

THT: What is your vision for Nepal's hydropower future?

GK: We are on the cusp of an energy revolution. Over the next decade, we aim to generate 28,500 MW of electricity-13,500 MW for domestic consumption and 15,000 MW for export. This requires a robust infrastructure of cross-border transmission lines, especially with India, to ensure smooth energy trade.

Hydropower is not just about meeting energy needs; it's a nation-building tool. We can position Nepal as a regional energy leader by strengthening our partnerships with India and other neighbours. This will transform lives power industries, create jobs, and uplift communities.

THT: What message do you have for potential investors in Nepal's hydropower sector?

GK: Nepal is at a pivotal moment in its hydropower journey. The government is committed, the private sector is ready, and the global focus on green energy provides the perfect backdrop for investment. I invite both domestic and international investors to join us. Collaborating with India is particularly promising, as it offers immediate opportunities for energy trade and broader market access. Together, we can harness Nepal's immense hydropower potential to build a prosperous future for the nation and the region.

THT: Nepal's hydropower potential is massive, but so is the competition in the region. How can Nepal position itself strategically, and what role does India play?

GK: You're right-regional competition is heating up, with countries like Bhutan already exporting power to India and others exploring green energy opportunities. For Nepal, the key lies in timing and scale. Hydropower isn't just about generating electricity; it's about securing long-term market access. India, our immediate neighbour and one of the largest energy markets globally, offers unparalleled opportunities.

India's energy demand is skyrocketing, especially as it moves to decarbonize its economy and transition to green energy. If Nepal can establish itself as a reliable energy partner now, it can secure a strong foothold in this dynamic market. The stakes are high because other regional players are equally keen to supply energy to India. Missing this window could mean losing long-term energy contracts and market goodwill.

Its role as both a consumer and a gateway makes India indispensable. Through India, we can access regional markets like Bangladesh and even beyond. This collaborative approach isn't just about selling electricity; it's about embedding Nepal into the regional energy infrastructure, which will have multiplier effects on our economy.

THT: Beyond economics, are there strategic or geopolitical reasons for strengthening energy collaboration with India?

GK: Absolutely. Energy is not just an economic commodity-it's a geopolitical asset. Strengthening energy ties with India elevates Nepal's strategic importance in the region. With India serving as a bridge to South Asia's energy grid, collaboration ensures that Nepal remains a key player in shaping the regional energy narrative.

Moreover, energy collaboration fosters interdependence, which strengthens bilateral relations. A robust energy trade agreement with India brings predictability to Nepal's exports and signals political stability to international investors. In the long term, this could pave the way for greater regional integration, making Nepal a hub for clean energy in South Asia.

There's also a global angle. As the world increasingly prioritizes renewable energy, showcasing a strong partnership with India allows Nepal to attract support from multilateral agencies like the World Bank and the Asian Development Bank. They are more likely to invest in cross-border projects demonstrating regional cooperation and sustainability. In essence, collaborating with India is not just about today'smarket; it's about securing Nepal's position in the global green economy of tomorrow.