Construction of main tunnel begins at 106 MW Jagdulla Hydropower Project in Dolpa

KATHMANDU: Construction of the main tunnel for the 106 MW Jagdulla Semi-Reservoir Hydropower Project in Dolpa officially commenced on Thursday, marking a significant milestone for one of Nepal’s largest government-backed hydropower developments under the People’s Hydropower Program.

Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha inaugurated the tunnel excavation during a ceremony held at Ila in Mudkechula Rural Municipality-4, describing the project as a transformative investment that will accelerate economic growth, energy security and infrastructure development across Karnali Province.

Addressing the gathering, Minister Shrestha said the project—being jointly owned by the federal government, Karnali Province and local governments—represents a new model of cooperative investment in Nepal’s hydropower sector.

“This is not merely a project for Dolpa; it is a milestone for the entire Karnali Province,” he said, expressing confidence that the project would be completed on schedule. He stressed that continued cooperation among all three tiers of government, local communities and stakeholders would be essential for timely implementation.

Government highlights local participation

Energy Ministry Secretary Sarita Kumari Dawadi said the support and participation of local communities had been instrumental in advancing the project and emphasized the need for continued facilitation from all concerned agencies to ensure construction progresses without delays.

According to Sanjay Sapkota, Chief Executive Officer of Jagdulla Hydropower Company, the project is expected to become a major driver of economic, social and infrastructure development in Karnali in addition to expanding Nepal’s domestic electricity generation.

He said the project is one of Nepal’s model hydropower developments because it combines government ownership, local participation and domestic financing under the Ministry of Energy’s People’s Hydropower Program.

Twin hydropower projects with 230 MW combined capacity

The company is simultaneously developing two semi-reservoir hydropower projects in Jagdulla and Mudkechula rural municipalities of Dolpa.

The developments include:

• 106 MW Jagdulla Semi-Reservoir Hydropower Project
• 124.35 MW Jagdulla-A Semi-Reservoir Hydropower Project

Together, the projects will add 230.35 MW of installed capacity to Nepal’s national electricity grid.

The company said construction work under Lot One has already been completed, while physical construction has accelerated after the signing of the Engineering, Procurement and Construction (EPC) contract on August 11, 2025 (Shrawan 26, 2082 BS).

Infrastructure transforming Dolpa

Beyond electricity generation, the project has already delivered substantial infrastructure improvements in one of Nepal’s most remote mountain districts.

According to the company, it has financed and completed:

• A 100-metre permanent bridge across the Bheri River.
• Access roads along the Tribeni–Mudkechula–Jagdulla corridor.
• Construction of 10 Bailey bridges to improve connectivity.

The new infrastructure has significantly improved transportation in Dolpa.

Previously, travel from Nepalgunj to Dolpa often required more than three days. The improved road network now allows the journey to be completed within a single day under favorable conditions, while creating the possibility of operating overnight bus services between Dunai and Kathmandu.

The company also expects the infrastructure developed through the project to boost tourism by improving access to destinations including Rara Lake, Shey Phoksundo National Park, Jagdulla Lake, Upper Dolpa, Jumla, and Mugu.

Economic benefits and royalty income

Once operational, the project is expected to generate substantial royalty revenues for all levels of government.

According to company estimates:

• The federal government is projected to receive around Rs 195 million annually in royalties.
• The Karnali Provincial Government and the concerned local governments are each expected to receive approximately Rs 95 million annually.

Officials believe the revenue will strengthen local government finances and contribute to long-term regional economic development.

Financing secured through domestic institutions

The company said all major preparatory work for the 106 MW project—including the detailed engineering design, Environmental Impact Assessment (EIA), land acquisition, Power Purchase Agreement (PPA), financial closure and regulatory approvals—has already been completed.

Meanwhile, the 124.35 MW Jagdulla-A Project has completed its detailed engineering study, while its environmental assessment, PPA, financing arrangements and regulatory approvals are in their final stages.

The projects are being developed under a public ownership model in which:

• 51% of shares will be jointly held by government entities, the Karnali Provincial Government and local governments.
• 49% will be owned by the general public.

Within the public allocation, 10% of shares have been reserved for local residents, while an additional 3% will be allocated to landowners whose properties fall within the transmission line right-of-way corridor.

Rs 16.66 billion in domestic financing

The project has secured approximately Rs 16.66 billion in debt financing from domestic financial institutions, highlighting growing confidence in Nepal’s hydropower sector.

The financing consortium includes Nabil Bank, the Employees Provident Fund (EPF), Hydroelectricity Investment and Development Company Limited (HIDCL), Laxmi Sunrise Bank, Everest Bank, and NIC Asia Bank.

The Jagdulla development is expected to strengthen Nepal’s renewable energy capacity, support regional development in Karnali, create employment opportunities during construction, and contribute to the country’s long-term goal of expanding clean energy production while improving energy security and export potential.