Nepal UK
Nepal's energy minister has given private companies the government's first conditional go-ahead to prepare for trading electricity across borders, ending a long-standing restriction that has largely confined private firms to generating power.
Biraj Bhakta Shrestha, the Minister for Energy, Water Resources and Irrigation, approved a Letter of Intent (LoI) on Friday 16 October 2026. The document gives in-principle approval for companies to do the groundwork for cross-border sales. It does not allow them to trade.
What the approval covers
The preparatory work includes studying foreign and domestic markets, finding trading partners, negotiating terms and drafting power purchase and sale agreements. Companies can also carry out technical, financial and commercial feasibility studies.
Everything beyond that still requires separate permission. Firms will need licences, approvals, finalised agreements where applicable and access to transmission capacity before any electricity changes hands. As the published terms put it, an LoI does not authorise companies to begin electricity transactions on its own.
The conditions attached
The LoI carries several safeguards. Applicants must declare that they are not blacklisted, that the information they submit is accurate and that they will not misuse the approval. The letter creates no automatic right to a trading licence, and the government accepts no liability for agreements between companies and their partners.
Companies must submit progress reports within 15 days of the end of each quarter, and must obtain prior approval, where the law requires it, before changing ownership or shareholding. The government may suspend, revoke or amend a letter for breaches, false or misleading information, or reasons of public interest or grid safety. An LoI is valid for the period set by law or for two years at most, and extensions must be requested at least 30 days before expiry with reasons and a progress report.
Why it matters
Private hydropower developers have for years pressed for a role beyond generation. The practical effect of this decision is to let them start building commercial relationships and agreements in advance, so that they are not starting from zero if and when trading licences are issued. For investors, including Nepali professionals and businesses abroad who put money into hydropower, the move signals a policy direction rather than a revenue stream.
The published reports do not name any companies, buyer countries or export volumes, and they do not say when licences might follow. Those are the key unknowns. Without published licensing rules and guaranteed transmission access, an LoI may prove only a first step. Whether it speeds up exports will depend on how quickly the remaining approvals are put in place and on the capacity of the grid, neither of which was addressed in the material seen by NepalUK.
The timing is also notable. A 30 MW hydropower project, Khanikhola, began trial generation on 4 October and is scheduled to start commercial generation on 19 October, according to a separate 16 October economic summary. It illustrates the pipeline of new supply that private developers want to monetise.
No response from the ministry or from private-sector associations had been published at the time of writing.
