1. Background

Water is an important natural resource for the economic development of Nepal. Due to abundant availability of water resources and geo-physical structure, there is a lot of potential for hydropower generation in Nepal. Out of the country's 83,000 megawatt hydropower generation capacity, about 42,000 megawatts have been seen as feasible from an economic-technical point of view. For the overall development of the country, an investment-friendly, clear, simple and transparent policy system is necessary to advance the development process of hydropower, considering the potential of domestic consumption as well as export. After the restoration of democracy, the open and liberal policy adopted in the field of water resources has started to show positive signs in the field of hydropower development. In this process, our past experience and cooperation with the private sector, even though it is short, has shown the way. It has also been seen that the deficiencies that arose during the involvement and participation of the private sector in the water resources sector must be resolved. Since the development of hydropower in Nepal is seen to be helpful in advancing the development of not only the national but also the regional economy at a faster pace, it is desirable to advance the efforts of integrated water resources development in the concept of bilateral and regional cooperation, keeping Nepal's national interests as paramount. From this kind of effort, the country's economic development, industrialization, flood control, environmental protection, creation of employment opportunities, as well as the distribution of the benefits that will reach the lower coastal countries in a material way from the large reservoir project to be built in Nepal.