Nepal has enormous resources of water for electricity generation that has remained untapped. Water from the Northern part of the country covered by snowy mountains, the perennial sources of water; middle mountains, spring sources of water; freefall to Southern plane in the form of 6000 large and small rivers. The high gradient of these rivers provides higher potentiality of generating hydroelectric power. The geographical condition and water resources of the country is favourable to develop project of different capacities that varies from micro project (1kW) to Mega Project 10800MW (Karnali–Chisapani Project).

By the end of 2009, electricity generation from hydro has reached about 700MW only which is less than one percent of country’s total potential (8300MW). This vast potentiality of electricity generation will fulfill the country’s energy requirement and surplus energy can be exported to neighboring countries.

The Government of Nepal has adopted liberal policy to attract private investment for the development of hydropower projects. Nepal Electricity Authority (NEA), fully government owned organization, has its policy to purchase electricity from private companies. Many independent power producers are at the stage of feasibility study to supply power in the grid. To evacuate power from new power plants, the Government of Nepal is in the process of development of 29 high voltage North-South transmission lines at different parts of the country that connect East West trunk line. This has opened wide arena of hydroelectric project development in different parts of the country.