July 20, 2024, Saturday
Nepal 1:37:26 pm

NEA prepares for Budhi Gandaki hydropower project with majority shareholding

The Nepal Weekly
April 11, 2023

Kulekhani is the only storage type hydropower project so far has constructed in Nepal. In the initial phase, it had capacity to generate 60 MW of electricity. Later added Kalekhani II to generate 30 MW and added one more – Kulekhani III to produce 34 MW. These all three are constructed as a cascade to use the same water flow.

In the existing context, excluding Kulekhani, Kulekhani II and Kulekhani III, all are either Run-Off-River (ROR) or Peaking Run-of-River (PROR) type plants. ROR plants generate electricity as per volume of water flow in the river. PROR plants can store water for a few hours to generate electricity in the peak demand hours.

The existing ROR and PROR plants generate less amount of electricity due to lack of water in the river – below the demand level. That makes the country compelled to import electricity from India to cover up the demand. In such situation, the storage type of hydropower plants could generate electricity to support in the peak hours in the dry season.

Nepal Electricity Authority (NEA), the state-owned utility agency and body responsible for producing and distributing electricity, is now readying to own majority shares of the Budhi Gandaki Hydropower Project. The project to be constructed is one of the most ambitious electricity generating project in the country. 

This hydropower project has faced many ups and downs since its feasibility study was conducted in 1983/84. The 1200 MW national pride project has stalled due to various reasons.

The Budhi Gandaki Hydroelectric Project is a storage hydropower plant is to be located on the Budhi Gandaki river, approximately 2 km upstream of its confluence with Trishuli River, about 55 km west of Kathmandu (80 km by road). It will be the largest hydropower project in Nepal which will have 225 meters high dam.

Recently, the government has decided to go through a new modality to implement the project with the establishment of the Budhi Gandaki Hydropower Public Limited. The establishment of the public limited company has ended uncertainties and issues over the financial and operational modalities of project which will cost Rs 331 billion as per the estimate.  

NEA’s deputy executive director Pradip Kumar Thike has been assigned to deal with the issue and a taskforce has been formed under his coordination. The share structures of the project will be changed on the basis of the report of the taskforce, it is informed. 

It is worth mention that earlier Prime Minister Pushpa Kamal Dahal had directed the forwarding of the project. So, the share structures of the project needed to be changed to suite the new modality. 

A feasibility study of the project, located in Dhading and Gorkha districts, was conducted in 1983/84. NEA carried out another study in 2010. NEA again conducted a feasibility study, and prepared a detailed design and a bidding document before reaching an agreement with a French company. 

With view to develop the project, Dr Baburam Bhattarai when he was Prime Minister of the country had formed a committee to which the French company submitted the detailed project report later in 2014. 

Later in 2017, the energy ministry and the Chinese company, Gezhouba Group, signed a MoU to proceed ahead with the project. 

However, in the same year, the government decided to develop the project with domestic investments acting on the report submitted by the National Planning Commission. 

Again in 2018, then the government led by KP Sharma Oli decided to hand over the project to the Gezhouba Group.  After the Group lost its contract, the government in 2022 took back the project.

According to the existing procedures, the authorized capital of Budhi Gandaki Hydropower Public Limited will be worth Rs 20 billion, and the issued capital Rs 20 billion. The structure of the share will be 50 per cent to the Energy Ministry, 30 per cent to the Finance Ministry and 20 per cent to the NEA.

It is worth mention that the Government of Nepal has been collecting infrastructure development tax on fuels (excluding LPG) since May 2016. The tax was meant for supporting finance to the Budhi Gandaki Hydropower Project. The sum of collected tax has been more than 100 billion rupees so far.