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Nepal Government has approved the investment modality for the Budhi Gandaki project. This decision was tabled by Kulman Ghising, who was the president of Ujyalo Nepal Party and served as the Minister of Energy, Water Resources, and Irrigation in the interim government. The cabinet led by Sushila Karki has given the green light to the investment plan for the Budhi Gandaki Hydropower project.

The Budhi Gandaki Storage Project, with a capacity of 1200 MW, had been on hold for years. During his 111-day tenure as a minister, Ghising pushed forward the investment modality for this project. He described this decision as a significant achievement for the hydropower sector in Nepal.

Ghising, who is currently a candidate for the Kathmandu-3 constituency, made several decisions during his time as a minister to expedite the development of long-pending projects.

The government has approved the financial investment model for the long-awaited reservoir-based Budhi Gandaki Hydropower Project. Government spokesperson and Minister for Home Affairs Om Prakash Aryal informed that the Cabinet meeting held on Tuesday at the Office of the Prime Minister and Council of Ministers approved the investment framework.

The financial investment model for the 1,200-megawatt project, proposed to be constructed in Dhading and Gorkha districts, had been finalized by the Ministry of Energy, Water Resources and Irrigation in the second week of Mangsir and submitted to the Ministry of Finance.

After the Ministry of Finance granted approval to forward the proposal to the Cabinet, it was presented for consideration. Although Tuesday’s Cabinet meeting approved the investment framework, Chief Executive Officer of Budhi Gandaki Hydropower Company, Arjun Rajouria, stated that detailed information has not yet been received.

“Although it has been publicly announced that the investment framework has been approved, we have not yet received information on whether any amendments were made to the proposal,” he said. “However, this approval is particularly significant for moving the project into the construction phase.”

Former Minister for Energy, Water Resources and Irrigation, Kulman Ghising, had directed the company to prepare a feasible alternative financial investment model with the objective of advancing the project into the construction phase, after which the company developed the proposal.

According to the proposal approved by the Ministry of Energy, the project is planned to be constructed through domestic investment. The base cost of the project has been estimated at approximately NPR 374 billion, with a proposed financing structure of 30 percent equity and 70 percent debt.

The project’s construction period has been set at eight years, with interest during construction alone estimated at NPR 32 billion. It is stated that the government will invest NPR 97.47 billion as equity and NPR 150 billion in the form of concessional loans.

The proposal from the Ministry of Energy also includes allocating 50 percent of the infrastructure tax currently levied on petroleum products toward concessional loans.

Including expenditures already incurred, such as land compensation, the government will need to secure an additional NPR 228 billion in resources when calculating the total cost. The financial structure also plans to mobilize NPR 104 billion in loans from banks and financial institutions.

There is also a plan to involve public institutions such as the Employees Provident Fund, Citizen Investment Trust, Hydroelectricity Development Company Limited, and Social Security Fund in co-financing the project.