Water resources are important natural resources for the economic development of Nepal. Availability of abundant water resources and geo- physical features provide ample opportunities for hydropower production in Nepal. Out of the total hydropower generation capacity of about 83,000 megawatt (MW) in the country, about 42,000 MW of power generation appears feasible to date from financial–technical perspectives. In view of the internal consumption and export possibility of hydropower in the context of the overall development of the country, an investment friendly, clear, simple and transparent policy is necessary to enhance the development process of hydropower. An open and liberal policy pursued in the hydropower sector after restoration of democracy has started yielding positive indications in the field of hydropower development. Our past experiences as well as working in close association with the private sector, even though for a short period, have guided our path in this regard. It is also observed that the need to overcome the shortcomings and weaknesses that have emerged in the course of involvement and participation of the private sector in the water resource sector. In view of the contribution that hydropower development in Nepal could make in the speedy development of not only the national economy but also the regional economy; it is expedient to put forward efforts on integrated water resources development based on bilateral and regional cooperation with prime considerations to the national interest of Nepal. Such efforts shall result in the economic development, industrialization, flood control, environment protection, creation of employment opportunities in the state in addition to benefits from allocation of benefits substantially resulting to the lower riparian country from large storage projects built in Nepal.