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Nepal has been studying hydrogen fuel since 2008. After nearly 17 years of research, the government has begun work on producing green hydrogen fuel. A memorandum of understanding has been signed with South Korean company G-Philos to establish a green hydrogen plant and fuel cell facility in Nepal.

The Investment Board Nepal (IBN) is preparing a detailed project report (DPR) to explore producing hydrogen fuel using around 20 megawatts of electricity. According to IBN spokesperson Pradyumna Prasad Upadhyay, the proposed project is estimated to cost about Rs 6 billion. Initially, only a small-scale production will be attempted, with plans to expand depending on the feasibility study.

The agreement was signed on Thursday by IBN CEO Sushil Gyawali and G-Philos CEO Ga Woo Park. As per the agreement, the company will prepare the DPR within 10 months of receiving a survey permit from the board.

G-Philos had submitted its proposal on April 15 for the establishment, development, and operation of a green hydrogen and fuel cell plant in a public-private partnership model. The 63rd meeting of the IBN decided to grant the survey permit.

Biraj Singh Thapa, a researcher and associate professor at Kathmandu University, welcomed the agreement, noting that KU has been conducting green hydrogen research and even demonstrated a hydrogen-powered car. He highlighted that the Hydrogen Policy 2023, along with tax exemptions on machinery and equipment and a five-year income tax holiday announced in the current budget, has drawn foreign interest in Nepal’s hydrogen sector.

According to the policy, machinery and equipment imported for green hydrogen production are exempt from all taxes and duties. This, Thapa added, is expected to attract both foreign and domestic investors. The 20 MW feasibility study will also assess whether the fuel can be used domestically or exported, and identify a potential plant location.

Kathmandu University established a Green Hydrogen Lab in 2020 to research the use of hydrogen in fertilizer factories, iron ore processing, and as a coal substitute in cement industries. Hydrogen has long been considered a potential renewable energy source, and its production could help Nepal meet its commitment to achieving net-zero carbon emissions.

Several institutions have studied Nepal’s hydrogen potential. Tribhuvan University and Western Michigan University jointly concluded that hydrogen could be produced using hydropower, reducing petroleum imports. The Asian Development Bank carried out a similar study in 2020, while the Water and Energy Commission Secretariat assessed possibilities in 2021. A study in 2022 further explored hydrogen-based fertilizer production.

Globally, countries including India, China, and the United States have already developed hydrogen roadmaps and policies. Nepal’s Hydrogen Policy 2023 also recognizes significant potential for hydrogen and related products from hydropower.

Hydrogen is produced by splitting water into hydrogen and oxygen using electricity. Roughly one kilogram of hydrogen can be extracted from nine kilograms of water, requiring about 50 kilowatt hours of electricity. With abundant water resources and surplus electricity, Nepal is well positioned to produce hydrogen.

Hydrogen can be stored as a liquid, gas, solid, or metal hydride, making it suitable for domestic use or export. Studies suggest that hydrogen could replace at least two percent of Nepal’s diesel imports. Given the size of the domestic diesel market—worth around Rs 71bn—green hydrogen could play an important role in diversifying Nepal’s energy mix and enhancing energy security over the next decade.

German company DIAG Industries GmbH has submitted a detailed project report (DPR), along with estimated investment requirements, to the Office of the Investment Board Nepal (OIBN) for establishing a chemical fertilizer plant in the country. According to the report, the plant will produce two types of chemical fertilizers—urea and ammonium nitrate—through three different processes: natural gas, electrolysis and a hybrid method. The hybrid process would enable the production of both urea and ammonium nitrate simultaneously.

The project aims to replace Nepal’s fertilizer imports and reduce the country’s dependence on costly foreign supplies. The plant is expected to come into operation by 2028, according to information posted on the DIAG website. OIBN and the German firm had signed a memorandum of understanding (MoU) two years ago to prepare the DPR for the project. The 50th Board meeting of OIBN, held on 31 March 2022, decided to issue a survey license to DIAG based on its unsolicited proposal. As per the MoU, the company was required to submit the DPR within two years of receiving the license.

During the study, DIAG was asked to propose the most suitable technology—natural gas, electrolysis with carbon capture and storage, or a hybrid model combining both—for producing at least 700,000 tons of chemical fertilizers annually. The company has proposed to build the plant under a public–private partnership (PPP) model, with construction expected to take three and a half years.

As Nepal currently meets all of its fertilizer demand through imports, the crucial farm input often faces shortages during planting season due to supply constraints. The country’s annual demand for chemical fertilizers is estimated at around 700,000 tons. The government has allocated Rs 28.82bn in subsidies to procure 600,000 tons in the current fiscal year.

The German company has proposed to set up the plant at Bardaghat in Sarawal Rural Municipality, Nawalparasi West. The facility will cover 161.87 hectares and operate under the name DIAG Surya Green Fertilizer Pvt Ltd. According to an OIBN official, DIAG has estimated total investment at Rs 240bn.

The company has also outlined certain conditions, including a five-year tax holiday, a three-and-a-half-year construction period, guaranteed supply of 300 MW of electricity and the right to operate the plant for 30 years, among others.

The Nepal Stock Exchange (NEPSE) gained 12. 03 points to close at 2, 761. 86 points on Monday.

Similarly, the sensitive index surged by 3. 74 points to close at 476. 38 points.

A total of 11,440,844-unit shares of 326 companies were traded for Rs 5. 10 billion.

Meanwhile, Him Star Urja Company Limited (HIMSTAR) was the top gainer today, with its price surging by 6. 07 percent. Likewise, Unnati Sahakarya Laghubitta Bittiya Sanstha Limited (USLB) was the top loser as its price fell by 7. 68 percent.

At the end of the day, total market capitalization stood at Rs 4. 61 trillion.

Just a few days ago in Siraha, rainfall prompted farmers to plant as much as possible despite the shortage of irrigation. On 2 Dec 2022, the headworks of a canal were rebuilt at Khuttikhola in Lahan Municipality-10, with assurances that it would provide irrigation. The Water Resources and Irrigation Development Division Office, Siraha, had signed an agreement with Multitech Construction Company for the construction of the headworks at a cost of Rs 85m, ultimately paying Rs 86m upon completion.

Nearly four years later, however, the structure has failed to provide any support to farmers.

Instead, politics has overshadowed the canal project. Construction remains uncertain due to disputes. Since the headworks were built at a location downstream of the water level, no water has been able to flow into the canal. This prompted the Office of the Auditor General to raise questions about the design in its 2024 annual report. “During the on-site inspection of the project, the headworks were built at a higher elevation than the river water level. This indicated that water could not be collected or distributed through the headworks without design improvements and additional construction work. As the design and contract placed the headworks at a higher elevation than the river water, operation assurance must be ensured,” the report stated.

During the foundation stone-laying ceremony, officials had declared the project would cost Rs 180m, promising that water would flow through the canal and even create a water park. The plan was to use the remaining funds for culvert construction and canal drainage. At that time, a culvert was also built from Grameen Chowk to the West Canal near JS Campus. But after the Auditor General’s report raised concerns, no additional budget was approved.

In the current fiscal year 2025/26, the Madhesh Province government allocated only Rs 1.5m for the canal. On Aug 4, the Irrigation Office, Siraha, awarded a contract worth Rs 800,000 to Shivam Construction of Lahan Municipality-1 for canal cleaning and drainage. However, when the gate of the headworks was opened and tested after the work was completed, river water did not flow into the canal. Instead, water that had accumulated in the canal flowed back into the river.

The gate has been ceremonially opened twice after performing pujas, but without success. Local resident Hanif Rain said, “Millions were spent on this project. The irrigation chief, technical staff, and contractor colluded in its construction.” He made a video of the issue and shared it publicly.

Another local, Devraj Pokharel, said, “There was no transparency or community discussion. Everything was done for their own convenience. If the canal is deepened further, locals will suffer. The Commission for the Investigation of Abuse of Authority should investigate and take action.”

After canal cleaning began, Hemant Yadav, chairperson of the Lahan Nagar Committee of the CPN-Maoist Center and leader of the Kisan Sangharsh Samiti, claimed water would flow within a week. But even after two weeks, no water has reached the canal. He now argues that if the canal is properly managed, water will flow. Meanwhile, the roads along the canal have begun sinking after excavation. However, Hasmat Ansari, head of the Siraha Irrigation Office, insists that more digging is needed due to level mismatches.

A technical team from the Irrigation Office recently re-examined the site. Irrigation sub-engineer Sanjeev Kumar Yadav said, “There is soil blockage up to 90 cm in places. Removing it will allow some water to rise. The culvert at Grameen Chowk will need to be demolished to divert water to the West Canal.”

According to Survey Office Lahan’s fieldbook, a culvert is recorded on land parcels Lot No 82 (15 katta 6 dhur) and Lot No 21 (1 bigha 17 katta 2 dhur). However, the landowner or responsible office is not mentioned. The culvert divides the canal southward and westward from Grameen Chowk. The Irrigation Office claims the canal could irrigate over 935 bighas across wards 2, 11, 12, 19, 20, 21, 22, and 23 of Lahan Municipality, along with areas of Laxmipur Patari, Sakhuwanankarkatti, and Bhagwanpur rural municipalities. The canal itself was dug more than 60 years ago. Today, much of it lies in market areas where locals have filled sections to create farmland.

Locals warn that releasing floodwater directly into the canal will increase risks in surrounding areas. According to elders, the canal dates back to the time of Prime Minister Chandra Shamsher. Initially, it provided some irrigation, but the headworks were washed away by floods within months. No further budget was allocated afterward. Later, when Bal Krishna Khand was irrigation minister, local leaders requested funding for new headworks. The ministry instructed the Water Resources and Irrigation Office to form a committee, but staff secretly appointed UML leader and then-mayor Muni Sah as chairperson. Despite repeated ministry requests, the committee received no funds.

On 2 Dec 2020, the Irrigation Office signed a contract for new headworks. On 8 Nov 2021, Mayor Sah laid the foundation stone, awarding the project to BP JV Lahan-7 for Rs 28m from the 2020/21 municipal budget. The contractor, who signed the agreement on 27 Dec 2020, was required to finish by 1 Nov 2021. However, due to poor construction, the concrete structure collapsed before completion, further blocking the canal. Crores of rupees in government investment were wasted.

In the 2022 local elections, Congress candidate Mahesh Chaudhary defeated Sah to become mayor. Chaudhary resumed canal work by allocating Rs 80m from the 2024/25 municipal budget. The plan included building an underground drainage system to channel water south from the headworks and improving roads. Initially, there was no opposition when the DPR was published, the contract announced, and the foundation stone laid. But once construction began, a Kisan Sangharsh Committee was formed, and protests erupted. During demonstrations, structures built on the canal were vandalized.

The committee later filed a case at the Rajbiraj High Court, which issued an interim order to continue work in a balanced way without damaging the canal’s appearance. The writ was eventually dismissed, as the court ruled the petitioners’ demands were insufficient.