Generation and consumption of electric energy in Nepal is minimal. The major sources of energy are still the agriculture and the forest-based resources. Despite the abundant possibility of hydropower generation as a renewable energy source, this source has not been harnessed to the desired extent. Majority of the people is still deprived of electrical energy. The industrial enterprises have not developed at the desired pace due to the lack of electrical energy. In this context, development of hydropower energy that can be generated from our own available resources in Nepal has become imperative. An opportune hydropower policy is foreseen as prerequisite for supply of hydropower energy at a reasonable price by developing hydropower, which has the pivotal role in the development of rural electrification, supply of domestic energy, creation of employment and in the development of industrial enterprise. It has become important in this context that the hydropower policy should clearly reflect the direction on vital issues such as development of multipurpose plans for maximum utilization of the available water resources, appropriate sharing of benefits, role of public and private sector, utilization of internal as well as external market, and clarity and transparency in activities of Government of Nepal with the private sector, etc. Based on the experiences gained in the course of implementing the principles followed by the Hydropower Development Policy, 2049 (1992), emerging new concepts in the international market and their impacts, technological development, possibility of export of hydropower energy, possibility of foreign investment and commitment in environmental protection with a view to make it clear, transparent, practical and investment friendly; revision and improvement of the hydropower policy has become imperative.