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By Sandeep Chaudhary

Credit to Electricity Sector Surges — Sign of Nepal’s Power Infrastructure Boom

Credit to Electricity Sector Surges — Sign of Nepal’s Power Infrastructure Boom

Nepal Rastra Bank’s mid-month monetary survey for August 2025 paints a powerful picture of the country’s energy transformation. Credit to the electricity sector jumped by Rs. 1.7 billion in just one month, reaching nearly Rs. 438 billion — the highest ever level in Nepal’s financial history. This surge underlines the rapid pace of hydropower and transmission-line development as commercial banks continue to channel funds toward infrastructure that promises long-term returns and national energy independence.

Analysts attribute the rise in electricity credit to the increasing number of hydropower projects under construction and private-sector participation in renewable generation. Nepal’s ongoing efforts to expand domestic power supply and export surplus energy to India and Bangladesh have driven financing demand from both large-scale hydropower companies and supporting industries such as equipment suppliers, contractors, and engineering firms.

The NRB data shows that while other sub-sectors such as agriculture (-1.4 %) and wholesale/retail trade (-0.5 %) contracted slightly, energy and transport credit continued to expand steadily. This structural shift indicates that the banking system now views power infrastructure as one of the safest and most productive long-term investment areas, especially amid Nepal’s strategic focus on becoming a regional energy exporter.

Economists note that this growth in electricity credit aligns with Nepal’s Green and Sustainable Financing Framework, as banks increasingly adopt ESG-aligned lending practices. However, they also caution that delays in project completion and payment bottlenecks from the Nepal Electricity Authority could affect the sector’s cash flow stability in the near term.

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