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The 20 MW Budhiganga Hydropower Project, identified on the Budhiganga River, a tributary of the Seti River flowing through Sudurpashchim Province, has finally entered the construction phase. The project has moved forward 14 years after loan financing from the Kuwait Fund and the Saudi Fund for Development was secured.

The Government of Nepal signed a loan agreement with the Kuwait Fund on July 4, 2012, and with the Saudi Fund for Development on June 18, 2014, to finance the project. However, construction was delayed for years due to various administrative, technical, and procedural hurdles.

Studies for the project began as early as 1995. After completing detailed engineering studies, design work, and an Environmental Impact Assessment (EIA), the project has now entered the procurement stage. As a result, construction is beginning nearly 30 years after the initial studies and 14 years after foreign financing was secured.

Project Status

According to the Department of Electricity Development, 320 ropanis of land have already been acquired to facilitate the project, which aims to enhance Nepal’s sustainable economic growth and strengthen the public sector’s capacity in hydropower development.

Land acquisition has been completed across three districts for the dam site, powerhouse, campsite, Budhiganga substation, and office buildings. Construction of the site office, residential quarters, and other essential camp facilities has also been completed.

Detailed engineering design and the environmental impact assessment for power generation have been finalized. The project will be implemented through three separate contract packages:

- Lot 1: Civil works and hydromechanical works

- Lot 2: Electromechanical works

- Lot 3: Transmission line construction

The Department stated that a contract for Lot 1 was signed with Super Power Baniya JV in Bhadra 2082 BS. An EPC contract worth Rs. 6.93 billion has been awarded with a completion period of 42 months. Survey work, field investigations, and layout design have already been completed.

By the end of FY 2082/83, Lot 1 had achieved around 6 percent physical progress. By the end of FY 2083/84, the project aims to complete design and initial construction works while achieving over 15 percent progress in headworks and tunnel construction.

Lot 2 covers electromechanical works. Partial budget allocation has been secured, and after obtaining resource approval from the Ministry of Finance, the government plans to invite bids during FY 2083/84 and implement the package in coordination with the civil and hydromechanical works.

The National Grid Company Limited is responsible for the substation and transmission line works after obtaining the necessary permits from the Department of Electricity Development.

Investment Structure

The project was initially estimated to cost Rs. 10.33 billion. The estimate was later revised to Rs. 13.47 billion, but according to the latest revision, the total project cost has been reduced to approximately Rs. 9.04 billion, the department said.

To implement the project through joint financing, the Government of Nepal signed loan agreements with the Kuwait Fund for Arab Economic Development in 2012 and the Saudi Fund for Development in 2014.

The financing includes:

- Saudi Fund: 112.5 million Saudi Riyals (approximately US$30 million)

- Kuwait Fund: 5 million Kuwaiti Dinars (approximately US$18 million)

- Government of Nepal: approximately US$12 million

Once completed, the electricity generated by the project will be transmitted through a 132 kV transmission line to the Nepal Electricity Authority’s substation located 81.7 kilometers away.

The government believes the project will contribute to balanced development in Sudurpashchim Province while promoting integrated economic activities and regional development.

Challenges and Community Support Programs

The project continues to face several administrative and technical challenges. These include:

The need for restructuring and renewing foreign loan agreements through continued coordination among the Department, the Ministry of Energy, and the Ministry of Finance.

Delays in procuring and importing explosives required for tunnel excavation, preventing the start of major structural works.

Difficulties in transporting construction materials due to the project’s remote location, far from the capital, provincial headquarters, and major highways.

Limited availability of skilled manpower, technical experience, and other resources.

Alongside power generation, the project has been implementing community support programs aimed at improving the socio-economic conditions of local communities. These initiatives include:

- Construction and improvement of school buildings and educational infrastructure.

- Strengthening local health posts.

- Development of rural roads and irrigation systems.

- Agricultural and vocational skills training.

- Tree plantation and other environmental conservation activities.

Small-scale projects are implemented through user committees, while larger projects are carried out through the public procurement process.

Overall, the government believes the Budhiganga Hydropower Project will play a significant role in promoting balanced regional development and integrated economic growth in Sudurpashchim Province.

Urjasanchar