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The 1,200 MW Budhigandaki Reservoir Hydropower Project has called for bids for preparatory works, including the construction of camps and a bridge.

Budhigandaki Company Limited, the project developer, issued a tender notice on Monday for the construction of permanent residential and office buildings (camp facilities) as well as a bridge over the Budhigandaki River. The bridge will connect Dhading and Gorkha districts, linking Benighat in Dhading with Siurenibazaar and Selang roads in Gorkha.

The long-delayed 1,200 MW project, which had been stuck in uncertainty over its financing modality, is now moving ahead toward the construction phase. The financing model, approved twice by the Cabinet of the interim government, has now come into implementation.

During the interim government period, the Cabinet meeting held on January 16, 2026 decided to approve the project’s financial investment framework. However, the decision was not certified at that time.

Later, the Cabinet meeting held on February 24, 2026 again approved the financing model, although uncertainty remained over formal certification.

Finally, on March 23 2026, the Ministry of Energy, Water Resources and Irrigation sent an official letter to the project developer, Budhigandaki Company Limited, confirming approval of the financial investment framework.

The current fiscal year’s budget statement, under clause 224, states that the Budhigandaki project will be developed under a public–private partnership (PPP) model.

In the last month of December–January 2026, the Ministry of Finance had already agreed to the investment framework of the 1,200 MW Budhigandaki Reservoir Hydropower Project. After the ministry’s approval of the financing modality, further processes were moved ahead.

With budget release from the Ministry of Finance, bids have now been invited for the construction of a permanent bridge and camp facilities, said Arun Rajauriya, Chief Executive Officer of the project promoter, Budhigandaki Company Limited.

We plan to award contracts and begin construction of the main project from January 2028,” he said. “Within two years, we will complete the power purchase agreement (PPA), financial management of the project, and construction of the access bridge and camp at the project site.” He added that preliminary discussions are ongoing with various banks and financial institutions to mobilize investment for the project.

The Budhigandaki Reservoir Hydropower Project, which will be built in Dhading and Gorkha, has an estimated base cost of USD 2.77 billion (around NPR 374 billion). The construction period is estimated to be 8 years.

Including interest during the construction period, which amounts to NPR 32 billion, the total project cost is estimated at NPR 406 billion. Based on this total cost (including interest during construction), the financing structure has been designed with a 70:30 debt-to-equity ratio (70% loan and 30% equity).

The promoter company of the Budhigandaki Project, Budhigandaki Company Limited, will have 80% ownership by the Government of Nepal and 20% by the Nepal Electricity Authority (NEA).

After completion of the project, or during the final stage of construction, shares may also be issued to the general public based on feasibility and financial indicators. This is intended to reduce the loan burden or restructure government equity.

Under the government’s investment plan, a total of NPR 248 billion will be invested - comprising NPR 97.47 billion as equity and NPR 150 billion as concessional loans. So far, the NPR 45 billion already invested by the government has been converted into equity shares in the company.

After deducting the already spent amount, the remaining NPR 228 billion government investment still needs to be secured from identified funding sources.

The Nepal Electricity Authority will invest NPR 24.37 billion as equity in the project.

Funding for the project is expected to be mobilized through multiple channels, including
issuance of NEA shares, energy bonds, loans from banks and financial institutions, concessional loans from the government, revenue collected from the infrastructure tax on petroleum products, and share issuance to foreign employment workers, Non-Resident Nepalis (NRNs), and the general public.

To reduce financial costs and make the project feasible, an energy bond worth NPR 3 billion (30 billion rupees) will be issued under government facilitation, and it will be counted as part of the mandatory liquidity ratio (SLR) requirement.

This bond can be purchased by banks and financial institutions, insurance and reinsurance companies, and public funds. Additionally, NPR 10.4 billion (1.04 trillion rupees) will be mobilized as loans from banks and financial institutions.

The financing modality also includes participation through a consortium involving the Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance and reinsurance companies, HIDCL, Nepal Telecom, and commercial banks.

Once operational, the project is expected to generate 3.38 billion units of electricity annually, including 141 million units in the dry season and 197 million units in the wet season.

The proposed electricity purchase rates are NPR 12.40 per unit in the dry season and NPR 7.10 per unit in the wet season.

Based on this, the project is expected to generate annual revenue of NPR 31.48 billion after electricity production begins.

The generation license period of the project will be 50 years, meaning that if construction is completed within 8 years, the project will produce electricity for 42 years thereafter.

The Detailed Project Report (DPR) and tender documents are already prepared and ready for implementation.

The progress of land acquisition, considered the most complex part of the project, is about 96 percent complete. A total of NPR 4.5 billion has been distributed to landowners as compensation for land, structures, trees, plants, and fruit losses.

The project will physically and economically affect 8,117 households in Gorkha and Dhading districts. Among them, 3,560 households will be fully displaced. The company has stated that a formal resettlement and relocation framework will be developed for those who are fully displaced.

The government had launched the project as a national pride project in FY 2012/13, with a target to complete it in FY 2026/27. At that time, the Office of the Auditor General’s 60th annual report had estimated the total project cost at NPR 260 billion.

On April 7 2023, the Cabinet decided to develop the project through a company model with domestic investment. Following this decision, the Budhigandaki Hydropower Company Limited was established on July 6 2022, with majority government shareholding.

On November 9 2023, the Cabinet directed that a financing structure be finalized for the project. Soon after, Budhigandaki Hydropower Company Limited had proposed two financing options in March 2024. However, uncertainty arose as the Ministry of Finance did not approve the financing structure.

At that time, the project was estimated to cost NPR 310.47 billion with Viability Gap Funding (VGF), while without VGF support, the total construction cost was estimated at NPR 398.02 billion.

Kantipur