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The energy sector, widely regarded as a key pillar of the country’s economic prosperity, is seeking a policy “departure” from the budget for the upcoming fiscal year 2026/27. As the government’s policy and program has placed energy, water resources, and irrigation sectors among its top priorities, the private sector and stakeholders are now expecting a budget that brings practical reforms alongside policy commitments.

This time, the government has adopted a policy of advancing the energy sector not merely as a matter of infrastructure development, but as a strategic sector directly linked to civilization, culture, biodiversity, and human existence. Therefore, the upcoming budget is expected to differ from previous approaches by focusing on structural reforms, facilitation, and investment promotion.

The Independent Power Producers’ Association Nepal (IPPAN) has also expressed confidence that long-demanded issues such as a “one-door system” and a “sunset law” for the energy sector will finally be addressed through the budget.

Finance Minister Dr. Swarnim Wagle has already hinted that the upcoming budget will give special importance to the energy and physical infrastructure sectors while responding to lawmakers during discussions on the principles and priorities of the Appropriation Bill.

The government’s recently unveiled policy and program presents rivers not only as water resources but also as the foundation of human civilization, religious faith, cultural continuity, and ecological balance. This reflects an effort to expand the development concept beyond hydropower generation and infrastructure construction by linking river systems to the broader ecosystem of life.

According to the policy, scientifically significant rivers from religious, cultural, environmental, and social perspectives will undergo scientific studies. The government has also committed to preserving the traditional knowledge, lifestyles, and spiritual ties of indigenous and local communities living along riverbanks as national heritage, signaling an attempt to balance development with identity preservation.

In recent years, rapid hydropower construction, river exploitation, excavation, and climate change have begun affecting natural river flows, biodiversity, and riverbank lifestyles. In this context, the government’s declaration to ensure “clean and continuously flowing river systems” has been viewed as meaningful. Experts say it sends a message that rivers are not merely tools for energy production but living ecological systems.

Since the upcoming budget will be formulated based on these policies and programs, the private sector expects positive outcomes. IPPAN President Ganesh Karki said the energy sector is waiting for the introduction of a “sunset law” to accelerate development.

According to him, more than 40 files remain stalled at the Ministry of Forests alone, and project implementation would become easier if all services were made available through a single-window system. The private sector believes the upcoming budget will address this issue.

The government has also proposed implementing an integrated water resources management system based on river basins. Under this approach, hydropower, irrigation, drinking water, tourism, and downstream benefits will be integrated through multipurpose project development. This is being viewed as a long-term and coordinated model for water resource utilization.

In the energy sector, the government has reiterated its ambitious target of generating 30,000 megawatts of electricity within the next decade. To achieve this goal, it plans to amend laws related to energy, forests, land, and the environment and implement a one-door approval system. The objective is to make project approval processes faster, more transparent, and investment-friendly.

The government has also introduced a policy allowing project-affected local residents to receive opportunities for share investment instead of only cash compensation. This is interpreted as an effort to make local communities direct economic partners in projects.

Maintaining its policy of expanding private sector participation in electricity generation, transmission, distribution, and energy trade, the government also aims to increase domestic electricity consumption by promoting energy-based industries. Cross-border energy trade agreements are expected to be used as a foundation for attracting long-term investment.

Minister for Energy, Water Resources, and Irrigation Biraj Bhakta Shrestha said the government has focused its activities on establishing the energy and water resources sector as a major pillar of prosperity. Expressing confidence that the upcoming budget would create a new foundation for this goal, he instructed the ministry and subordinate agencies to prepare accordingly.

The government also plans to expand off-grid solar, wind, and micro-hydropower systems in rural and remote areas where the national transmission line has not yet reached. This is expected to improve energy access while reducing regional inequality.

In terms of the green economy, the government has placed green hydrogen and chemical fertilizer industries under strategic priority. Such industries will receive tax and customs exemptions, concessional electricity tariffs, capital incentives, and investment-friendly policies. The government has also announced plans to begin infrastructure development necessary for the commercial use of green hydrogen in the transport sector.

In irrigation, the government plans to utilize groundwater resources in areas of the Tarai-Madhesh lacking irrigation facilities, while promoting lift irrigation technology in cultivable hill and Himalayan terraces.

The policy also prioritizes consumer participation in the modernization, repair, and rehabilitation of large irrigation projects. The government has additionally prioritized climate change risk management.

It plans to expand automated hydrological and meteorological stations, strengthen forecasting systems, and make multi-hazard early warning systems more reliable. Overall, the government appears to be attempting to link energy and water resource policies not only to economic growth, but also to environmental sustainability, cultural preservation, biodiversity, and community existence.

During discussions on the principles and priorities of the Appropriation Bill, Rastriya Swatantra Party lawmaker Shriram Neupane stressed that identifying, utilizing, and managing Nepal’s vast water resources is essential for national prosperity.

He emphasized the need to immediately introduce a “Sunset Act” to facilitate rapid investment, faster decision-making, and long-term vision in the sector.

“Along with good governance, the first priority is balanced energy production and consumption. To make the country prosperous, exports must increase and imports must decrease. Today we are consuming more than we produce, and that is increasing the trade deficit and burdening the economy,” he said.

For a long time, there have been calls to end the situation in which investors seeking to invest in the energy sector must visit seven ministries and 21 departments for approvals. The government’s policy and program has already signaled that this issue will be addressed. Stakeholders believe that if the upcoming budget introduces concrete measures, the energy sector could make a qualitative leap forward.

Currently, the country’s total installed electricity capacity has reached 4,300 megawatts. With electricity exports already underway to India and Bangladesh and major transmission lines under construction, the private sector says the government must now seriously remove practical, policy, and technical obstacles.

Stakeholders have also stressed that the government’s commitment to moving forward in partnership with the private sector - which currently contributes nearly 80 percent to the energy system - must now be translated into practical action.