Budhigandaki hydro project heading towards construction phase

By A Staff Reporter,Kathmandu, Jan. 18: The much-talked-about 1,200 MW Budhigandaki reservoir-based hydropower project has begun moving concretely towards the construction phase. 

The Ministry of Finance and the National Planning Commission have approved the project’s investment modality prepared during the tenure of then Minister for Energy, Water Resources and Irrigation, Kul Man Ghising.

Ghising made this information public on social media on Saturday, calling it a concrete achievement among the works done during his tenure.

"This is not just an administrative agreement but a concrete step towards the nation's dream that has awaited for years. Now this modality has now reached the stage of being submitted to the Council of Ministers for a final decision," he said.

He said the process advanced due to his initiative and termed it a major achievement in the energy sector during his 115-day tenure. According to Ghising, the investment modality was prepared in November, proposing to raise 70 per cent of the project cost through loans and 30 per cent through equity.  

The project’s base cost is estimated at USD 2.77 billion (approximately Rs. 374 billion).

Under the modality, the government will hold an 80 per cent stake in Budhigandaki Company Limited, the project developer, while the Nepal Electricity Authority (NEA) will own the remaining 20 per cent. The government’s total investment in the project is estimated at Rs. 248 billion, comprising Rs. 97.47 billion in equity and Rs. 150 billion in concessional loans. 

Around Rs. 45 billion already invested by the government will be converted into equity in the company.

"This modality has been prepared with the confidence that we can build such a large project with domestic investment," Ghising said. "Budhigandaki, which has been limited to confusion, debate and waiting for years, has now reached the stage of moving forward towards construction. There is no room for delay now - work must begin."

The construction period of the project is eight years. The project is expected to generate 3.38 billion units of electricity annually, including 1.41 billion units during the dry season and 1.97 billion units during the rainy season.  The proposed electricity purchase and sale rates are Rs. 12.40 per unit in winter and Rs. 7.10 per unit in the rainy season. Once operational, the project is expected to generate annual revenue of Rs. 31.48 billion.

The proposal also seeks to extend the project’s electricity generation license to 50 years. If completed within eight years, the project will produce electricity for 42 years.