Kathmandu. Minister for Energy, Water Resources and Irrigation, Physical Infrastructure and Transport and Urban Development Kulman Ghising has said that the investment modality of the 1,200-MW Budhigandaki Hydropower Project, a national pride project, needs to be finalized immediately.

Minister Ghising said that a decision should be made immediately regarding the investment modality after holding discussion with Secretary at the Ministry of Energy, Water Resources and Irrigation Chiranjivi Chataut and officials of promoter Budhigandaki Company Limited.

MD Ghising requested the company management to finalize the investment modalicity through financial analysis of the project. “If the expenditure incurred so far for land acquisition, compensation amount for the forest area and the compensation amount for the trees to be cut down, customs duty and VAT are exempted, the project could be made possible for investment,” he said. “The project will have 50 percent equity and 50 percent debt,” said Ghising. ’

According to a report prepared by the consultant in 2015, the estimated cost of the project was 2.59 billion US dollars. The estimated cost of the project is $2.77 billion (approximately Rs 332 billion). The construction period of the project is 8 years.

The company has developed two modalities: when VGF is available and when it is not available. In the first option, if the government does not provide VGF, the ratio of equity and debt will be 25 percent and 75 percent respectively. For this, it has been proposed that additional and concessional loan should be made available as investment by including the government’s expenditure on land acquisition by including incorporating it in equity.

In the second option, if VGF is available, the equity and debt ratio will be 30 percent and 70 percent respectively. The government has proposed to provide Rs 73 billion for land acquisition, rehabilitation of public infrastructures, environment protection and use of forest areas.

The amount for equity will be raised from the government, NEA, Employees Provident Fund, Citizen Investment Trust, Nepal Telecom and the general public.

The detailed project report and tender documents of the project are ready. The progress of land acquisition is around 90 percent. A sum of Rs 42.65 billion has been distributed to the landowners as compensation for land compensation, structures, plants and fruits. The project will affect 8,117 households of Gorkha and Dhading physically and financially. Of this, 3,560 households will be completely displaced.

Budhi Gandaki is of strategic importance from the point of view of energy security as it is close to the load centers like Kathmandu, Chitwan and Pokhara. A 263-metre-high curvature arch dam will be constructed to stop the Budhi Gandaki River that flows through the border of Gorkha and Dhading districts. It will affect 14 former VDCs (4 rural municipalities and one municipality) of Dhading and 13 VDCs of Gorkha district.

After the dam is built, the water reservoir will spread over 63 square kilometers upstream. Due to the 63 square kilometers construction in Budhigandaki, employment, business, tourism hub, fisheries and other benefits can be availed. The maximum water level of the project is 540 m. It will last. The project will generate 3.38 billion units of electricity annually.