Though government funding has shrunk, Nepal's higher education (HE) sector has expanded in the last three decades in terms of the establishment of new institutions and the implementation of a series of projects funded by the World Bank. Using neoliberal instrumentalism as a theoretical framework and critical policy sociology as a methodological tool, this paper analysed key policy documents produced by the World Bank and the Government of Nepal for implementing three most recent HE projects in Nepal. The paper argues that a new version of human capital theory, which stems from neoliberal instrumentalism in education, has guided HE policies and practices of Nepal. Though a number of reform strategies are implemented with the aim of increasing performance and competition, the HE sector has become increasingly unresponsive to the needs of Nepali communities and societies.