- Ten banks will provide Rs 52.5 billion in loans for the construction of the Budhigandaki semi-reservoir hydropower project under private sector investment in Nepal.

- The project will have a capacity of 341 megawatts and its total cost is estimated at Rs 70 billion.

- Once the project comes into operation, it is expected to generate an average of 1,867.77 gigawatt-hours of electricity annually.

Loan financing has been secured for what will be the largest hydropower project to date in Nepal to be built under private sector investment. Ten banks and financial institutions will jointly provide Rs 52.5 billion in loans for the construction of the 341-megawatt Budhigandaki semi-reservoir hydropower (PROR) project.

The project’s promoter company, Times Energy, stated that investment has been arranged under a consortium model led by Nepal Investment Mega Bank (NIMB). At a program held in Kathmandu on Thursday, Times Energy Director Sushil Thapa and Nepal Investment Mega Bank Chief Executive Officer (CEO) Jyotiprakash Pandey signed the agreement.

The total estimated cost of the project is Rs 70 billion. Of this, 75 percent - that is, Rs 52.5 billion - will be raised through loans, while the remaining 25 percent will come from the promoter’s equity. Times Energy, the promoter company, is 51 percent owned by Sahas Urja Limited. Accordingly, Sahas Urja will bear the majority of the equity investment, the company said.

The total estimated cost of the project is Rs 70 billion. Of this, 75 percent - that is, Rs 52.5 billion - will be raised through loans, while the remaining 25 percent will come from the promoter’s equity. Times Energy, the promoter company, is 51 percent owned by Sahas Urja Limited. Accordingly, Sahas Urja will bear the majority of the equity investment, the company said.

Under the leadership of Nepal Investment Mega Bank, Nabil Bank, Laxmi Sunrise Bank, and Global IME Bank will serve as co-leads in providing the loan investment. NIMB will provide Rs 10 billion, Nabil Bank Rs 8 billion, Laxmi Sunrise Bank Rs 8 billion, Global IME Bank Rs 7 billion, Machhapuchchhre Bank Rs 4 billion, Citizens Bank Rs 3 billion, Nepal Infrastructure Bank Rs 3 billion, and Prabhu Bank Rs 3 billion.

Agriculture Development Bank will provide Rs 2.5 billion, and Hydroelectricity and Development Company will provide Rs 4 billion in loans. The Budhigandaki Hydropower Project is the largest project promoted by Sahas Urja Limited. Earlier, financial arrangements had already been made for the 285-megawatt Upper Tamor and the 216-megawatt Upper Seti hydropower projects.

Among the projects already in operation, the 86-megawatt Solukhola Dudhkoshi is the largest project completed by the private sector. The Solukhola Dudhkoshi, built by Sahas Urja, has been operational since January-February 2023. The 86-megawatt Solukhola Dudhkoshi hydropower project also received loan investment led by NIMB.

At the program, Nepal Investment Mega Bank CEO Pandey stated that Sahas Urja had previously completed the construction of the 86-megawatt Solu Dudhkoshi project on time and brought it into operation, and that they are now ready to invest again. “We had invested before as well. Because of Sahas Urja’s leadership experience and working style, banks are ready to invest in the Budhigandaki project,” he said.

The dam for the Budhigandaki semi-reservoir project will be constructed in Chumnubri Rural Municipality-3 of Gorkha. The powerhouse is planned to be located in Dharche Rural Municipality-3. There is approximately a 10-kilometer distance between the dam and the powerhouse. The powerhouse will be underground and the project will include a 398-meter-long head (water drop height), a 6.9-kilometer tunnel, and six turbines with a capacity of 56.8 megawatts each. The dam will be able to store 1.76 million cubic meters of water, allowing electricity generation for up to 6 hours per day.

After the project becomes operational, it is estimated to produce an average of 1,867.77 gigawatt-hours of electricity annually. The company stated that electricity production will be 320.30 gigawatts during severe drought, 243.43 gigawatts during normal drought, and 1,304.04 gigawatts during the rainy season. The required design discharge for the project’s operation is 100.25 cubic meters per second.

Times Energy will sell the electricity generated from the project to the Nepal Electricity Authority. According to the power purchase agreement (PPA) with the authority, electricity will be purchased at a rate of Rs 4.80 per unit during the rainy season, Rs 8.40 during winter, and Rs 10.55 during peak hours. The generated electricity will be connected to the 400 kV Ratamate Substation in Nuwakot, currently under construction by the Millennium Challenge Corporation (MCC), via a 220 kV transmission line approximately 45 kilometers long.

According to the company, the cost per megawatt of the project is approximately Rs 205.3 million. The return on investment is estimated to be 16.99 percent. According to the feasibility study, the investment is expected to be recovered within five and a half years. The company stated that the project’s net present value is Rs 2.324 billion.

Sahas Urja purchased 51 percent of Times Energy’s shares in December 2023-January 2024. Since then, the company has obtained construction and production permits for the project from the Department of Electricity Development. The company aims to start commercial production from the project by January 2 2031.

The promoter company claims that the project has low financial and physical risks. Due to road access to the construction site, availability of transmission lines, assured water resources, and suitable geographical conditions at the site, the project is expected to be completed on time.

Himprasad Pathak, Chairman of Times Energy Pvt. Ltd., said that raising investment for such a large private sector project is itself a matter of joy and pride. “Among the projects already operational in the private sector, we are about to develop one of the largest projects, as well as another large project under construction,” he said.

For those who try to create narratives that nothing can be achieved in Nepal, Sahaj Urja and the projects it has invested in and constructed have provided a strong response, said Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel at the financial management program. Based on past experience, he expressed hope that the Budhigandaki Hydropower Project will also be completed on time.

Energy, Water Resources, and Irrigation Minister Deepak Khadka stated that the development of projects at this level, as the capacity of the private sector increases, is itself a matter of happiness.

He stated that the Budhigandaki Hydropower Project, which is expected to recover its investment within five years, is attractive and anticipated to be completed on time. Mahesh Dhakal, Senior Deputy CEO of NIMB, said that investing in the largest hydropower project promoted by the private sector is a matter of pride.

Source: Kantipur