Nepal hydropower sector sees profit surge amid legal disputes

Nepal’s hydropower sector has seen a significant surge in profitability. During the fourth quarter of the last fiscal year, 106 hydropower companies listed on the Nepal Stock Exchange reported a combined net profit of Rs 11.11 billion, a substantial increase from the Rs 1.22 billion earned in the previous year.

Several factors contributed to this growth, including a decline in bank interest rates from approximately 13 percent to 6.5 percent, increased electricity generation during the rainy season, and higher consumption. The latter was driven by a shortage of liquefied petroleum (LP) gas, which led consumers to rely more on electricity for cooking.

Simultaneously, the government is facing scrutiny regarding hydropower development in protected areas. Despite a January 2025 Supreme Court ruling declaring certain legal provisions for commercial projects in these zones invalid, the government has continued to issue land-use and environmental permits. Investigations indicate that at least 10 private projects, totaling over 360 MW, have received permits in areas including the Annapurna, Gaurishankar, and Kanchanjunga protected areas.