Background to the Energy Situation
in Nepal

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Presently, only 1% of the energy needs of Nepal are being met by electricity. The electricity grid is centered in urban and semiurban centers and the vast majority of the rural population has no access. As a whole, around 85% of Nepal's total population has no access to electricity.  

The present installed capacity of the NEA Including private and others is 610MW, of which 65 MW are generated from thermal plants and 545 MW from hydropower. Nepal's hydroelectric potential has been estimated at more than 80 gigawatt out of which half is recongnized as economically viable in the present energy market. Out of this economically attractive potential, only 1.5% has been developed, while the country is facing acute power shortage.  

The national electricity system is forced to rely on expensive diesel power and implement periodical load shedding to compensate for supply shortages caused by technical failures or low river flows during the dry season. These shortages have a direct effect on the country as they reduce the productivity of all sectors and limit industrial growth. The energy sector in Nepal remains supply constrained; the demand for energy is significant and subject to exponential increases if reliable energy can be made available to consumers.  

In rural areas, firewood still is the major source of energy consumption (74%), with animal residues providing a further 20%.  

This practice is no longer sustainable, resulting in deforestation and soil erosion. Moreover, population growth is placing further stress on the land. Nepal's Eighth Five-Year Plan stresses that alternatives to the rural energy demand must be developed. Hydro and other renewable energy technologies will play a major role to provide solution.

Please see Investor Information: Energy Sector for more detailed information.

The Private Energy Sector in Nepal

The Hydropower Development Policy 2049 (1992) and the Electricity Act 2050 (1993) constitute the government's major policy to develop the nation's water resources through private sector participation.  

The private hydroelectricity sector of Nepal comprises a small but growing number of companies. Among them are Butwal Power Company Ltd. (BPC), Bhote Koshi Power Company, Annapurna Power Company as well as LEDCO and a handful of small suppliers from micro to mini hydroelectric schemes.  

Please see Investor Information: Private Sector for more detailed information.  

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For more information, please contact our ledco office in Kathmandu.
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