For the construction of the Budhi Gandaki Hydropower Project, NPR 168 billion has been collected under the Infrastructure Development Tax levied on fuel. According to the Nepal Oil Corporation, this amount has been collected from fiscal year 2015/16 (2072/73 BS) up to Poush 15 of fiscal year 2025/26 (2082/83 BS). The amount has been collected under the heading of infrastructure development and construction of the Budhi Gandaki Hydropower Project.

The government began imposing a tax on petroleum products with the objective of constructing the 1,200-megawatt Budhi Gandaki Hydropower Project, which lies in Dhading and Gorkha districts. With the aim of building the project through domestic investment, the government initially started collecting a tax of NPR 5 per liter on imported petroleum products. This was increased to NPR 10 per liter by a Cabinet meeting on Falgun 12, 2078 BS (February 24, 2022). Since then, the government has been collecting NPR 10 per liter at customs points on fuel imports under the Infrastructure Development Tax.

Nepal Oil Corporation spokesperson Manoj Kumar Thakur stated that the amount collected as infrastructure development tax is deposited directly into the government’s account.

Financial Investment Modality Approved for Budhi Gandaki

The government has approved the financial investment modality for the 1,200-megawatt reservoir-based Budhi Gandaki Hydropower Project. The Cabinet meeting held on Sunday approved the financial modality for this national pride project.

Based on a proposal from the Ministry of Energy, Water Resources and Irrigation, and with concurrence from the Ministry of Finance and the National Planning Commission, the modality was submitted to the Cabinet for approval. With the Cabinet’s approval of this long-discussed national pride hydropower project, the process of construction will move forward.

Budhi Gandaki Hydropower Company Limited’s Chief Executive Officer, Arun Rajouria, said that since the investment modality has been approved by the Cabinet, work such as construction of a permanent office, roads, and bridges for the project will proceed.

He informed that preparatory work will be completed within two years, and preparations are underway to begin construction in January 2028. Completion of the project is expected to take around eight years. The total cost of the project, including interest during construction, is estimated at NPR 406 billion, and it is to be built with domestic investment.

The company stated that the project’s strategic plan has been prepared and has reached the final stage. It has already distributed NPR 42 billion in compensation for 49,000 ropanis of land to 7,000 households in Dhading and Gorkha districts.

The investment modality has been designed with 70 percent debt and 30 percent equity. Under this arrangement, government investment will include NPR 97.47 billion in equity and NPR 150 billion in concessional loans, totaling NPR 248 billion. Of the equity share, the Ministry of Finance will hold 30 percent, the Ministry of Energy 50 percent, and the Nepal Electricity Authority 20 percent. Additionally, the company has stated that it will issue energy bonds worth NPR 30 billion.