The government is preparing legislation aimed at streamlining approvals for infrastructure development, particularly in the hydropower sector, but the proposal has drawn scrutiny from environmental and social policy experts who warn it could weaken existing safeguards.
The bill, formally titled the Infrastructure Facilitation Bill and widely referred to as a “Sunset Law,” is being drafted under the leadership of National Planning Commission member Arjun Jung Thapa. It seeks to simplify legal and procedural requirements that developers say have significantly delayed large-scale energy and infrastructure projects.
Private-sector hydropower developers have backed the proposal, arguing that Nepal cannot meet its hydropower expansion targets over the next decade without legal reform. Current environmental regulations, they contend, create lengthy approval processes that stall project implementation.
Nepal’s existing framework, the Environment Protection Act, 2019, and the Environment Protection Regulations, 2020, requires environmental impact assessments and addresses areas including forest conservation, pollution control, and compensation. Critics, however, say the framework does not adequately account for the long-term livelihoods of communities dependent on rivers and aquatic ecosystems.
The concern is most visible among indigenous and river-dependent communities such as the Majhi, who have historically relied on Nepal’s rivers for food and income. Across several river basins, hydropower construction has been linked to declining fish populations and disrupted ecosystems, affecting groups with little formal recourse. While developers are required to offer project shares to affected local residents, the broader social and economic consequences of river diversion and dam construction remain a point of contention.
Internationally, the bar on such protections tends to be higher. Canada integrates indigenous consent and rights directly into its environmental assessment process. Brazil’s constitution prohibits displacement of communities without resettlement and livelihood guarantees in place, and courts have halted projects in the Amazon that bypassed indigenous consent requirements. The United States, India, Norway and others maintain environmental clearance processes that sit separately from, and as a prerequisite to, technical and financial project approval.
Cirtics argue that the proposed bill could legitimately address procedural bottlenecks around land acquisition, tree felling permits, and bureaucratic delays, but argue it should simultaneously strengthen, not reduce, protections for affected communities. They point to the absence in Nepal’s current framework of any systematic comparison between the economic value of electricity generation and the broader ecological, cultural, and social value of river systems, a gap that leaves policymakers without a full picture when approving projects.
As the government moves toward finalising the draft, the central question in the debate has shifted from how to accelerate infrastructure development to whether that acceleration can be achieved without transferring its costs disproportionately onto communities and ecosystems that have little say in the process.