Kathmandu, June 22: The government has rolled back a contentious provision in the national budget related to the hydropower sector, following widespread criticism and political pressure.

During Tuesday’s session of the House of Representatives, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel announced an amendment to Clause No. 227 of the upcoming fiscal year’s budget. Addressing lawmakers’ concerns, he clarified that the ‘take and pay’ provision—widely criticized for its potential impact on hydropower development—would be removed under specific conditions.

According to the revised clause, power purchase agreements (PPAs) will now be allowed only for those hydropower projects that have either confirmed domestic demand or export viability. Additionally, the Nepal Electricity Authority (NEA) must be able to meet its financial commitments based on a thorough risk assessment.

Previously, the clause had stated: “Substations and transmission lines will be constructed in line with the schedule of hydropower project completion. A policy will be adopted to maintain balance between electricity generation and consumption while signing PPAs. PPAs will be signed for run-of-river projects under the 'take and pay' model.”

This earlier wording had ignited sharp political debate, particularly between the ruling CPN-UML and the main opposition Nepali Congress. The controversy compelled the government to reconsider its stance.

The backlash intensified after the budget’s unveiling, with stakeholders from across the energy sector voicing strong objections to the mandatory adoption of the ‘take and pay’ model. The policy even exposed fault lines within the government itself: while Energy Minister Deepak Khadka advocated for revising the provision, Finance Minister Paudel had initially resisted calls for change.

Adding to the pressure, Nepali Congress President Sher Bahadur Deuba openly opposed the clause and urged its removal before the final endorsement of the fiscal year 2025/26 budget in Parliament.

Facing growing political and public pressure, the ruling parties, including both the Nepali Congress and CPN-UML, reached a late-night agreement on Monday to remove the contentious provision from the budget document—marking a rare moment of cross-party consensus in response to public and stakeholder concerns.

People’s News Monitoring Service