Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Minister for Energy, Water Resources and Irrigation Kulman Ghising has emphasized the urgent need to finalize the investment modality for the 1,200 MW Budhigandaki Reservoir Hydropower Project, calling it a project of national pride that should no longer remain stalled in procedural delays.
During a discussion held with Energy Ministry Secretary Chiranjibi Chataut and officials from Budhigandaki Company Ltd., Minister Ghising stated that the project must not be kept in a “status quo,” adding that the financial structure should be confirmed immediately based on updated cost analysis. He directed the company to submit a clear investment framework without delay.
Minister Ghising suggested that the project could be made financially viable if the government provides tax exemptions on land acquisition, forest land utilization compensation, customs duties, and value-added tax. He further proposed that half of the infrastructure tax currently collected on petroleum imports could be directly allocated to the Budhigandaki project fund. Additionally, he said that ordinary shares of the Nepal Electricity Authority could be issued to the public to raise capital.
Ghising recommended an investment structure consisting of 50% equity and 50% loan, ensuring that the government does not carry the full financial burden.
According to the consultant report prepared in 2015, the project’s cost was estimated at USD 2.59 billion. After price adjustments, the revised estimate now stands at USD 2.77 billion, equivalent to around Rs 332 billion, with an expected construction period of eight years.
The company has prepared two investment options depending on whether the government provides Viability Gap Funding (VGF):
So far, about 90% of land acquisition has been completed, with Rs 42.65 billion already paid in compensation. The project will impact 8,117 households in Gorkha and Dhading, of which 3,560 households will face full resettlement.
The reservoir will cover 63 square kilometers, with the project expected to generate 3.383 billion units of electricity annually, making it strategically significant for Nepal’s future energy security and load supply stability.
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