---
title: "PPP model and its significance in Nepal"
subject: "Engineering Professional Practice"
chapter: 6
key: "semester_8/engineering_professional_practice:ppp-development-nepal"
source: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/ppp-development-nepal
site: BCT Engineering
---

# PPP model and its significance in Nepal

Engineering Professional Practice · Chapter 6: Contemporary Issues in Engineering

- Asked in: 2071 Bhadra, 4 marks; 2071 Magh, 4 marks (asked 2 times)
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/ppp-development-nepal
- Whole chapter: https://www.bctengineer.com/md/semester_8/engineering_professional_practice/chapter-6

## Question

How does the PPP model help in development activities? What is its significance in a developing country like Nepal?

## Short answer

Public Private Partnership (PPP) mobilizes private capital, management and efficiency to deliver infrastructure faster, sharing risks between government and private party. In Nepal, it is significant for hydropower, roads and urban infrastructure where public funds are limited, as shown by Bhotekoshi and Khimti. Success requires fair contracts and competitive selection.

## Answer

#### PPP and how it helps development

Public Private Partnership (PPP) is a long-term arrangement in which the government and a private party share the finance, risk and responsibilities for building and running infrastructure or providing a public service. The private party usually recovers its investment from user charges or from payments by the government.

**Common forms:** Build-Operate-Transfer (BOT), Build-Own-Operate-Transfer (BOOT), Build-Own-Operate (BOO), concession, lease, and management contract.

```text
 Government ----- agreement ----- Private company
 (policy, land,                   (finance, design,
  regulation)                      build, operate)
        \                           /
         +------ Public (service, tariff) ------+
```

**Benefits**

- Mobilises private capital, so projects can start without waiting for the government budget.
- Brings private management, technology and efficiency, with faster completion and better maintenance.
- Shares and transfers risk (construction, cost and demand risk) to the party that can best manage it.
- The government can use its limited funds for social sectors like health and education.
- Creates jobs and skills.

#### Significance for Nepal

Nepal needs huge investment in hydropower, roads, airports, water supply and urban infrastructure, but the government's budget and capacity are limited, so PPP is very important. Examples are independent power producers such as Khimti (60 MW) and Bhotekoshi (45 MW), which sell electricity to the Nepal Electricity Authority under power purchase agreements. Nepal has the Investment Board Nepal Act 2068, the PPP Policy 2072, and later the Public Private Partnership and Investment Act 2075 to support large PPP projects.

**Cautions:** weak contracts, unfair tariffs, political instability, land acquisition problems and lack of transparency can cause failure, so the private partner should be selected by the fair, open and competitive procedure of the Public Private Partnership and Investment Act 2075.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. How does PPP help development?
   A. Mobilises private capital so projects start without waiting for the government budget
   B. Raises taxes
   C. Stops private investment
   D. Delays projects
   Answer: A. Private finance lets projects proceed and frees government funds for health and education. (Key point: PPP benefit)

2. In PPP, risk should go to
   A. the party that can best manage it
   B. always the government
   C. always the contractor
   D. nobody
   Answer: A. Risks are shared with the party best able to manage them. (Key point: Risk sharing)

3. Which are examples of PPP-type projects in Nepal?
   A. Khimti and Bhotekoshi independent power producers selling to NEA
   B. Local school building
   C. Tax office
   D. Police station
   Answer: A. IPPs sell electricity to NEA under power purchase agreements. (Key point: Nepal example)

4. Which can cause PPP failure?
   A. Weak contracts, unfair tariffs, land problems and lack of transparency
   B. Fair open bidding
   C. Strong regulation
   D. Clear risk sharing
   Answer: A. These cautions lead to failure; selection should be through open bidding. (Key point: Cautions)

## Related in Engineering Professional Practice

- [Globalization and development within own culture](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Aglobalization-development-own-culture) — Engineering Professional Practice, chapter 6

## Related in other subjects

- [Development, energy rate, HDI of Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fenergy_environment_and_society%3Adevelopment-energy-hdi-nepal) — Energy Environment and Society, chapter 1
- [Activities in OO system development](https://www.bctengineer.com/question.md?key=semester_6%2Fobject_oriented_analysis_and_design%3Aactivities-oo-system-development) — Object Oriented Analysis and Design, chapter 1
- [Status of irrigation development in Nepal](https://www.bctengineer.com/question.md?key=semester_6%2Firrigation_and_drainage_engineering%3Airrigation-status-nepal) — Irrigation and Drainage Engineering, chapter 1, asked 4×
- [Historical development of roads in Nepal](https://www.bctengineer.com/question.md?key=semester_6%2Ftransportation_engineering_i%3Ahistorical-development-roads) — Transportation Engineering I, chapter 1, asked 2×