hydropower sector is likely to grow manifold following the signing of a power trade agreement (PTA) with Indianinvestors keen to finance hydro projects. The hydropower sector has attracted the most FDI pledges. According to statistics of the Department of Industry, Nepal has attracted FDI commitments of Rs.16.93 billion from 20 different projects during 2011-12 to 2013-14.
The country is likely to produce 8,000-9,000 MW of electricity in the next 10 years. However, the most challenging issue is the development of transmission lines to connect the generated power to the national grid. Several transmission line projects, including the 75-km Khimti-Dhalkebar and the ThankotChapagaun-Bhaktapur line, have hit snags due to land pooling and compensation issues. The problem has led to demands for temporary involvement of the private sector in developing short transmission lines under the build-operate-transfer scheme.
allotted Rs.12.62 billion for electricity generation and Rs.13.55 billion for building transmission lines in the current fiscal year’s budget. The budget also talks about unbundling the state-owned Nepal Electricity Authority into three separate entities – generation, transmission and distribution.