Energy ministry recommends financial designs for accelerating 1,200 MW Budhi Gandaki Hydropower Project

KATHMANDU: In a bid to expedite the much-anticipated 1,200 MW Budhi Gandaki Hydropower Project, the Ministry of Energy, Water Resources and Irrigation (MoEWRI) has presented the government with financial recommendations, aiming to overcome the project’s sluggish progress.

The MoEWRI committee has proposed three alternatives for the investment modalities of the Budhi Gandaki project. In the first scenario, the ministry suggests maintaining an 80:20 ratio of loans to equity, estimating a total investment of Rs 306.16 billion.

The government’s injection, excluding viability gap fundings, is recommended at Rs 187 billion, with Rs 155.38 billion in subsidized loans and Rs 88.78 billion in commercial loans.

The equity of Rs 62 billion is to be shared with 51 percent by the government, 20 percent by Nepal Electricity Authority, and the remaining nine percent by various public entities.

The second alternative suggests a 75:25 ratio of loans to equity, with an estimated total investment of Rs 303.77 billion.

The recommended government investment is Rs 187 billion, comprising Rs 148.24 billion in concessional loans and Rs 38.36 billion in equity. Commercial loans are proposed at Rs 79.53 billion.

In the third financial modality, a 70:30 ratio of loans to equity is advised, projecting estimated expenses of Rs 301.22 billion. The recommended government contribution is Rs 187 billion, with Rs 140.59 billion in subsidized loans and Rs 46.51 billion in equity.

MoEWRI officials highlight that the committee favors the first alternative, emphasizing its assessment of risk, return, and overall investment considerations. The government, in its plan, has allocated Rs 73 billion for compensation, restoration, and rehabilitation.

Despite the establishment of Budhi Gandaki Hydropower Company Limited last year, dedicated to constructing the national pride project, progress has been hampered by delays in finalizing the financing modality.

The MoEWRI’s recommendations aim to streamline the financial structure and propel the Budhi Gandaki Hydropower Project toward realization.