Eight months after the government ordered the Nepal Electricity Authority (NEA) to sign power purchase agreements (PPA) with run-of-the-river (RoR) hydropower projects for up to 1500 MW capacity, the state-owned power monopoly has finally decided to resume signing the PPAs addressing a major demand of the independent power producers (IPPs). The NEA board meeting on Thursday decided to do PPA for up to 1500 MW  under take or pay modality. The meeting chaired by Deputy Prime Minister and Minister of Energy, Water Resources and Irrigation Rajendra Linden decided to move ahead with PPA of RoR projects on the basis of the date-wise chronological order of the Grid Connection Agreement. The electricity produced by these projects will be purchased on the basis of the principle of 'take or turn'. NEA will buy electricity generated from the projects at Rs 8.40 and Rs 4.80 per unit for the dry season and rainy season respectively. As of now, NEA has signed connection agreements with 136 projects for a combined capacity of 3,192 MW.

NEA had stopped signing PPAs with the hydropower developers of the ROR projects three years ago citing the 'financial risks' involved in such power produced by such projects. According to NEA, buying more power will add more financial burden to the organization as it is experiencing power spillage during the rainy season due to low domestic consumption and inadequate access to the Indian market.

In April 2018, the Ministry of Energy issued a white paper and decided to generate 15,000 MW of electricity in the next 10 years. Of the targeted 15,000 MW, PPAs were planned on the basis of the take-or-pay principle by keeping the ratio of reservoir and pump storage at 30 to 35 percent, peaking RoR at 25 to 30 percent, RoR at 30 to 35 percent and other alternative sources. A meeting of the cabinet of ministers on July 8, 2022, reviewed the production mix ratio and reduced it by 10 percent for reservoirs and increased it by 10 percent for RoR projects. As per the latest revision, the ratio of reservoir projects will be maintained at 20 to 25 percent, peaking RoR at 25 to 30 percent, RoR at 40 to 45 percent, and other alternative sources at 5 to 10 percent. With this, the limit for PPA for the RoR project increased from 5250 MW to 6750 MW.  According to the NEA Executive Director Kulman Ghising, with the latest decision, PPAs of the RoR projects can be signed until the limit of 6750 MW is reached. "The PPA of RoR projects was stopped about three years ago, as there was a possibility of a big financial risk to the authority due to the lack of market certainty for the sale of electricity during the rainy season," said Ghising. The NEA expects the developers to take 5–7 years to complete the projects. “By that time, the domestic demand for electricity will also increase significantly and our power exports to neighboring markets will also rise significantly,” said Ghising. “That’s why we've decided to resume the signing of PPAs.”