Survey and Generation Licensing: The Sequence and What Stalls It

Three numbers describe Nepali licensing better than any narrative can. At the start of 2026 the Department of Electricity Development had issued survey licences covering 307 projects and 12,544 MW, and generation licences covering 274 projects and 11,144 MW. The country had 3,983 MW built. Licensing is not the scarce good; everything downstream of it is.

When a licence is needed

Section 3 of the Electricity Act 2049 (1992) prohibits survey, generation, transmission or distribution of electricity without a licence. The proviso is the part most readers miss. Nepali citizens and corporate bodies may generate up to 1,000 kW without any licence, and hydropower between 100 kW and 1,000 kW requires notice to the prescribed officer and nothing more. The Hydropower Development Policy 2058 directs those projects to register with the District Water Resources Committee.

That threshold explains a whole class of small rural and captive schemes that appear in no licence register. It also explains why a promoter with a 999 kW design and a promoter with a 1.2 MW design live in entirely different regulatory worlds.

The survey licence

An application goes to the prescribed officer with the project’s maps, the water resource and quantity, the capacity and expected annual generation, and cost and timeline estimates. A survey applicant does not have to file the economic, technical and environmental study report that a generation applicant must file. The point of the survey licence is to produce it.

Rule 7 of the Electricity Rules 2050 gives the Department fifteen days to notify a survey applicant of missing documents. Section 4 requires the decision within thirty days.

The licence itself runs for a maximum of five years under section 5(1). An extension is available where the licensee explains why work could not begin in time and the reasons are found proper and sufficient. That standard has no defined content, and it is where discretion enters the system.

The generation licence

The generation application must carry the economic, technical and environmental study report. The Department then has forty-five days to notify deficiencies, and must publish a notice allowing thirty-five days for public reaction. Section 4 sets the decision period at 120 days.

The statute caps generation, transmission and distribution licences at fifty years. That figure is almost never what appears on a licence. The Hydropower Development Policy 2058 sets the operating practice: thirty-five years from the date of issue for a project generating for domestic consumption, thirty years for an export-oriented project, and up to thirty years for captive plant tied to an industry’s operating life. A developer modelling a Nepali asset should build to the term on the licence document rather than the statutory ceiling, and should read it alongside what happens at expiry, discussed in cross-border power trade, licence expiry and project exit.

Licence fees

Schedule 11 to the Electricity Rules 2050, read with rule 24:

Capacity	Survey licence fee	Generation licence fee
1–5 MW	NPR 50,000 per year (lump sum)	NPR 100,000
5–100 MW	NPR 10,000 per MW per year	NPR 500,000
100–500 MW	NPR 1,000,000 per year	NPR 1,000,000
500–1,000 MW	NPR 2,000,000 per year	NPR 2,500,000
Above 1,000 MW	NPR 2,000,000 per year	NPR 5,000,000

Survey fees are annual and are paid into a deposit account in the Department’s name, then transferred to revenue when the licence issues. Generation fees are one-off. A renewal application is due one year before expiry under rule 25, and renewal costs half the original fee for a survey licence and the full original fee for a generation licence.

Against a hydropower capital cost measured in billions of rupees, none of these numbers deters anyone. That is part of the problem. The fee structure does not price the scarcity of good sites, so survey licences accumulate on river reaches nobody will build for a decade.

Where projects stall

Four points, in the order a developer meets them.

The site is already claimed. A survey licence attaches to a reach of river. Overlapping claims and speculative holdings are managed through the register and the public notice under rule 16, and contested reaches are resolved administratively rather than by any published allocation rule.

Environmental clearance is a precondition to the generation application, not a parallel workstream. The economic, technical and environmental study report required by section 4 has to exist before the generation licence application is complete. That places the Environment Protection Act 2076 process on the critical path years before construction. It is set out in land, forest, environmental and social approvals for energy projects.

The licence window is fixed and the study period is not. Five years is enough for a straightforward run-of-river scheme with road access. It is not obviously enough for a storage project needing multi-season hydrology, a reservoir survey and resettlement scoping, which is one reason the storage pipeline is thin. Extension is available, and discretionary.

Offtake. A generation licence obliges nobody to buy. In July 2026, 281 projects holding 16,425.77 MW of licences had no power purchase agreement. This is the stall that matters, and it is downstream of everything the Department controls.

The 2026 pause

Sector reporting through 2026 describes the Department as having stopped issuing new survey licences from April 2026 pending a policy review, while continuing to accept applications. We could not find a notice to that effect on the Department’s own notice list, and we do not state it as a Departmental decision. If it is accurate, the planning consequence is specific. A promoter beginning work now commits to site costs, joins a queue with no published exit date, and holds an application rather than a right.

The Investment Board route

Not every project is licensed through the same counter. The Department keeps three separate registers for projects handled through the Investment Board: proposal stage, generation licence applications, and issued generation licences. Under section 17 of the Foreign Investment and Technology Transfer Act 2075 (2019), the Department of Industry approves foreign investment up to NPR 6 billion and the Investment Board approves anything above it. A hydropower project of any real size crosses that line long before financial close. A capacity threshold is also widely asserted for energy projects; we could not confirm one, and it is flagged.

The two routes are not alternatives a sponsor picks between. A large foreign-invested hydropower project deals with the Department for its electricity licences and with the Board for its investment approval and project development agreement. Separate timetables, separate documentary standards, and no single instrument binding both.

Registers to check first

The Department publishes a cancelled generation licence register and a penalised promoters list alongside the live registers. Both are project-level and neither is summarised. A licence acquired in a share purchase still carries the statutory transfer restriction, so the Department must approve. Where the target is a company rather than a bare licence, the Electricity Regulatory Commission’s 2077 directive on mergers, acquisitions and share transfers by licensees applies as well. Two consents, two timetables, and no published service standard for either.

Sources

1. Electricity Act, 2049 (1992) — English text

   Government of Nepal, published by the Department of Electricity Development · 1992 — in force as at August 2026 · Tier 1 — Primary legal instrument

   Supports: Section 3 licence requirement and the 1,000 kW exemption; section 4 application, decision periods of 30 and 120 days and licence transfer approval; section 5 maximum licence terms of five and fifty years.

   Accessed 26 August 2026

2. Electricity Rules, 2050 (1993) — English text

   Government of Nepal, published by the Department of Electricity Development · 1993 · Tier 1 — Primary legal instrument

   Supports: Rules 4–7 and 15–16 on application contents, the 15-day and 45-day deficiency notices and the 35-day public notice; rule 21 extension; rule 24 and Schedule 11 fees; rule 25 renewal timing and renewal fees.

   Accessed 26 August 2026

3. Hydropower Development Policy, 2058 (2001) — English text

   Government of Nepal, published by the Department of Electricity Development · 2001 — policy, not statute · Tier 2 — Official publication

   Supports: Paragraph 6.12.11(2) licence terms of 35 years for domestic projects, 30 years for export-oriented projects and up to 30 years for captive plant; paragraph 6.12.3(b) on projects up to 1 MW registering with the District Water Resources Committee.

   Accessed 26 August 2026

4. Licence registers — survey, generation, cancelled and Investment Board projects

   Department of Electricity Development · Accessed 26 August 2026 · Tier 2 — Official publication

   Supports: That the Department maintains separate public registers by fuel and capacity band, including cancelled generation licences, applications pending, and Investment Board survey and generation licences.

   Accessed 26 August 2026

5. Merger, acquisition and share transfer directive for licensees, 2077

   Electricity Regulatory Commission · Posted to the Commission's website 8 April 2026 · Tier 1 — Primary legal instrument

   Supports: That a change of ownership or control in a company holding an electricity licence engages a separate Commission approval alongside the Department's consent to licence transfer.

   Accessed 26 August 2026