The government has prepared investment modalities for two major hydropower projects—the 1,200 MW Budhi Gandaki reservoir project and the 1,063 MW Upper Arun semi-reservoir project.
Both projects are planned to be developed using domestic investment. The proposed financial model includes raising funds by issuing initial public offerings (IPOs) of Nepal Electricity Authority (NEA) shares to migrant workers and non-resident Nepalis (NRNs), as well as offering primary shares of the projects to the general public. The plan also includes issuing energy bonds, taking concessional government loans, and utilizing revenue generated from the infrastructure development tax on petroleum products.
Speaking on Tuesday, Minister for Energy, Water Resources and Irrigation, Kulman Ghising, said the investment modalities were prepared after detailed financial analysis and will now be submitted for final approval.
The Budhi Gandaki Hydropower Project, located in Dhading and Gorkha, has a net estimated cost of USD 2.77 billion (approximately Rs 374 billion). With an eight-year construction timeline, the total cost—including interest—is expected to reach Rs 406 billion.
The financing modality proposes a 70:30 debt-to-equity ratio. The government will own 80 percent of Budhi Gandaki Company Limited, the project promoter, while the NEA will hold the remaining 20 percent.
The government’s investment will total Rs 248 billion, consisting of Rs 97.47 billion in equity and Rs 150 billion in concessional loans. So far, Rs 45 billion has already been spent on compensating landowners affected by the project. Additionally, 50 percent of the infrastructure development tax collected from petroleum imports will be allocated to the project.
Budhi Gandaki is expected to generate 3.38 billion units of electricity annually—1.41 billion units in winter and 1.97 billion units in the rainy season. The electricity tariff has been set at Rs 12.40 per unit (winter) and Rs 7.10 per unit (rainy season). The project will generate an estimated yearly income of Rs 31.48 billion. Its generation license is proposed for 50 years, meaning that after eight years of construction, the plant will operate for the remaining 42 years.
The 1,063 MW Upper Arun Semi-Reservoir Project, to be developed in Bhotkhola Rural Municipality of Sankhuwasabha, is estimated to cost USD 1.75 billion (around Rs 214 billion), including interest and cost escalation during construction. Its financing model also proposes 70 percent debt and 30 percent equity.
Of the promoter shares, 51 percent will be held by provincial and local governments, NEA, Nepal Telecom, Employees Provident Fund, Citizens Investment Trust, Social Security Fund, HIDCL, insurance companies, and NEA subsidiaries.
The remaining 49 percent will be offered to migrant workers, NRNs, employees of promoter institutions, project-affected communities, and the general public.
