The government’s new budget mentions adopting the “Take and Pay” not “Take or Pay” model for power purchase agreements (PPAs) in run-of-river hydropower projects. But during Monday’s Parliament session, Energy Minister Deepak Khadka clarified that the government is actually going ahead with a “Take or Pay” policy.
This has created confusion, as the budget speech by Finance Minister Bishnu Paudel clearly mentioned “Take and Pay”. That model means NEA (Nepal Electricity Authority) will only pay for electricity it actually uses. But in “Take or Pay”, NEA must pay the producer even if it doesn’t use the electricity, as long as it’s available as per the agreement.
Minister Khadka emphasized that this approach will attract more private investment in hydropower and transmission. He also mentioned that a public-private partnership model is being encouraged to develop transmission lines.
Hydropower producers and lawmakers have raised concerns about the mixed messaging. Some producers have even announced protests, arguing that misleading terms in the budget could hurt investor trust.
The key difference matters: “Take or Pay” ensures revenue for power producers, while “Take and Pay” leaves them vulnerable if NEA doesn’t buy the power.
