Under the leadership of the Nepal Electricity Authority, the 454-megawatt Kimathanka Arun Reservoir hydropower project is set to move forward.

The investment structure (modality) of the project has been prepared and sent to the Ministry of Finance through the Ministry of Energy.

The project identified in Bhotkhola Rural Municipality-2 of Sankhuwasabha is being advanced with the goal of constructing it using domestic capital. Including interest during the construction period, the estimated total investment of the project will be NPR 9.794 billion. It has been proposed that the project be constructed through a power production company in which the government and government bodies are the founders.

According to the prepared financial modality, 70 percent of the total cost, i.e., about NPR 68.55 billion, will be raised through loans, and the remaining 30 percent, i.e., NPR 29.38 billion, will be raised through equity. For loan management, co-financing has been proposed involving the Hydro-Electricity Investment and Development Company (HIDCL), the Employees’ Provident Fund, the Citizen Investment Trust, the Social Security Fund, insurance companies, and banks and financial institutions.

The equity portion is planned to be collected through share issuance from the company’s founders, non-resident Nepalis, Nepalese working abroad, local residents of the project-affected districts, members of extremely poor families, and the general public.

Chiranjivi Chatout, Secretary of the Ministry of Energy, Water Resources and Irrigation, stated that after reviewing the proposed modality prepared with financial analysis, the estimated project cost has been updated and the financial management process has been immediately advanced accordingly.

Noting that the power production company has obtained project licenses but has not been able to move forward with construction, he expressed the view that the Kimathanka project must be built by the company itself for its long-term revenue and sustainability.

The proposed investment structure of the project and the institutional equity plan accordingly have been approved by the company’s board of directors and submitted to the Ministry of Finance. So far, NPR 731.4 million has been spent on the study and pre-construction of the Kimathanka Arun project.

Land acquisition for the project office and staff housing (camp) has been completed, and compensation and damages for the land required for the construction of structures such as the dam, reservoir, and powerhouse have already been determined. It is estimated that around NPR 450 million will be needed for this purpose.

The project is estimated to generate 269.97 million units (269.97 GWh) of electricity annually. Of this, the peak and off-peak energy during the winter season are expected to be 47.31 million units and 35.33 million units respectively, while production in the rainy season is expected to be 186.46 million units. It is projected that annual revenue from the sale of the produced electricity will be about NPR 1.691 billion.

In the power production company, the government will hold 30 percent, the Nepal Electricity Authority, Employees’ Provident Fund, and Nepal Telecom will each hold 10 percent, the Citizen Investment Trust will hold 5 percent, HIDCL will hold 4 percent, and National Life Insurance Company will hold 2 percent as founder share ownership. Twenty-nine percent of the shares will be reserved for the general public.

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