Budhi Gandaki Hydropower Gears Up for Swift Construction

The government has initiated essential deliberations to determine the construction and financial administration of the Budhi Gandaki hydropower project, a venture of national significance.

In response to Prime Minister Pushpa Kamal Dahal's directive to hasten the required procedures for the project, the Ministry of Energy, Water Resources and Irrigation (MoEWRI) has commenced systematic discussions. The Budhi Gandaki project's total capacity amounts to 1,200 megawatts.

The Council of Ministers has already agreed to allocate Rs 5 per liter from the infrastructure development tax imposed on fuel towards the Budhi Gandaki Hydropower Project's construction. Moreover, the compensation distribution process for the affected people is nearing completion. The government is prepared to launch the project in this fiscal year itself.

On Friday, MoEWRI convened a meeting aimed at promptly finalizing the financial and construction framework for the project. Energy Minister Shakti Bahadur Basnet instructed Jagat Shrestha, CEO of Budhi Gandaki Hydropower Company, to swiftly determine the share structure.

Regarding domestic investment, Minister Basnet directed discussions with the Employee Provident Fund, Citizen Investment Trust, banks, financial institutions, Nepal Telecom, and other organizations to calculate investable sums.

Moreover, Basnet tasked individuals with selecting an international consultant and appointing a project manager for project supervision. The government intends to finance the project through local investments. A decision remains outstanding on whether previously distributed compensation will qualify as government investment – thereby ensuring financial feasibility – or if alternatives will be pursued. Affected residents of Dhading and Gorkha have petitioned for an expedited project launch.

The government has also established an office in Siurenitar within the Gandaki Rural Municipality of Gorkha where the project resides. Minister Basnet directed CEO Shrestha and senior MoEWRI officials to urgently prepare necessary provisions and present them at the subsequent meeting alongside an action plan.

According to updated estimates, the total project cost stands at Rs 380 billion, with Rs 73 billion earmarked for compensation, restoration, and rehabilitation.

The government anticipates resource availability amounting to Rs 180 billion from petroleum products alone. CEO Shrestha suggests it may be more convenient for the government to allocate compensation and rehabilitation expenditures within the 'Viability Gap Fund' and make crucial decisions accordingly.

Minister Basnet urged relevant authorities to make necessary preparations for immediate construction commencement, given that budgets will be incrementally distributed and a substantial sum is not required upfront.

Project construction is expected to span approximately eight years, during which domestic investment could be accumulated. A government-established working group has recommended securing up to Rs 35 billion in commercial or subsidized loans.

CEO Shrestha asserts that the project can advance promptly after reviewing pertinent studies and reports conducted by the working group thus far. Similarly, MoEWRI Joint Secretary Nabin Raj Singh confirmed no issues concerning project management.

Moreover, Gopal Sigdel, MoEWRI secretary, emphasized the need to address local demands according to legal provisions, in addition to determining suitable staff management, investment approaches, and share ownership promptly.