Cabinet Approves Financial Modality of 1,200 MW Budhigandaki Hydropower Project

The government has approved the financial investment modality of the 1,200 MW Budhigandaki Reservoir Hydropower Project.

A Cabinet meeting held on Tuesday endorsed the project’s financing structure as outlined in the budget as well as policies and programmes for the current fiscal year, according to government spokesperson and Minister for Home Affairs Om Prakash Aryal.

The government said it has already distributed approximately Rs 39 billion in compensation for the residents of the project-affected areas. An additional investment of around Rs 80 billion will be required to this end. For the construction of the project, the government plans to allocate about Rs 22 billion annually for the next eight years.

The project, to be constructed in Dhading and Gorkha districts, has a base cost of USD 2.77 billion (approximately Rs 374 billion). Including interest during construction, the total estimated cost is projected to reach Rs 406 billion.

Under the approved modality, 70 percent of the total investment will be mobilised through loans and 30 percent through equity. The Government of Nepal will have 80 percent ownership and 20 percent by the Nepal Electricity Authority.

The government will invest Rs 97.47 billion in equity and Rs 150 billion in concessional loans, while the Nepal Electricity Authority will inject Rs 24.37 billion as equity. The plan includes raising around Rs 90 billion by issuing shares to the general public and mobilising Rs 30 billion through energy bonds. In addition, approximately Rs 104 billion will be borrowed from banks and financial institutions.

The project is expected to generate 3.38 billion units of electricity annually. The proposed power purchase rate is Rs 12.40 per unit during the dry season and Rs 7.10 per unit during the monsoon.

The project is expected to affect 8,117 families, and the government aims to begin commercial production within eight years.