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Construction of the main tunnel for the 106 MW Jagdulla Semi-Reservoir Hydropower Project in Dolpa has officially begun.

Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha inaugurated the tunnel construction during a ceremony held at Ila in Mudkechula Rural Municipality, Ward 4, on Thursday.

Addressing the event, Minister Shrestha said the project, being developed through joint ownership and investment by the federal, provincial and local governments, would become a milestone not only for Dolpa but also for the energy and economic development of the entire Karnali Province.

Expressing confidence that the project would be completed on schedule, he stressed the need for continued cooperation among all three tiers of government, local communities and other stakeholders to ensure its successful implementation.

Energy Ministry Secretary Sarita Kumari Dawadi said the active support and participation of local communities had helped the project move forward smoothly. She emphasized the need for all concerned agencies to facilitate timely completion of construction.

According to Sanjay Sapkota, Chief Executive Officer of Jagdulla Hydropower Company, the project will serve as a key driver of economic, social and infrastructure development in Karnali Province in addition to generating electricity. He said the project, being built under the Ministry of Energy's People's Hydropower Program, combines government ownership, local participation and domestic financing, making it one of Nepal's model hydropower projects.

The company said work under the first construction package has already been completed. It is currently developing two semi reservoir projects in Jagdulla and Mudkechula rural municipalities: the 106 MW Jagdulla Hydropower Project and the 124.35 MW Jagdulla A Hydropower Project, with a combined installed capacity of 230.35 MW.

The company claims the project has already made a significant contribution to Dolpa's physical infrastructure. Using its own investment, it has constructed a 100 metre concrete bridge over the Bheri River, built access roads along the Triveni, Mudkechula and Jagdulla road corridor, and installed 10 Bailey bridges. These structures have eased project construction while improving transportation and economic activities for local residents.

The expansion of road access has also transformed transportation in Dolpa. The company said that a journey from Nepalgunj to Dolpa, which previously took more than three days, can now be completed within a day. Improved connectivity has also created the conditions for operating overnight bus services between Dunai and Kathmandu.

The infrastructure developed under the project is expected to support tourism in Rara, Shey Phoksundo, Jagdulla Lake, Upper Dolpa, Jumla and Mugu over the long term.

Once the project comes into operation, the federal government is expected to receive around Rs 195 million in annual royalties, while the Karnali Provincial Government and the concerned local governments are projected to receive approximately Rs 95 million each, every year. The company says this will make a significant contribution to strengthening the local and regional economy.

According to the company, all major preparatory work for the 106 MW project has been completed, including the detailed engineering design, environmental impact assessment, land acquisition, power purchase agreement, financial closure and regulatory approvals. Physical construction accelerated after the engineering, procurement and construction contract was signed on August 11, 2025.

The detailed engineering study for the 124.35 MW Jagdulla A Project has also been completed. Environmental studies, the power purchase agreement, financing arrangements and regulatory approvals are in their final stages.

The project is being developed with 51 percent ownership by government agencies, the Karnali Provincial Government and local governments, while the remaining 49 percent will be owned by the general public. The company has reserved 10 percent of the shares for local residents and an additional 3 percent for landowners whose property falls within the transmission line right of way.

The project has secured around Rs 16.66 billion in debt financing from domestic banks and financial institutions. Financing has been arranged through a consortium comprising Nabil Bank, the Employees Provident Fund, the Hydroelectricity Investment and Development Company Limited (HIDCL), Laxmi Sunrise Bank, Everest Bank, and NIC Asia Bank.