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The 828 MW Uttarganga Reservoir Hydropower Project, which has remained stalled for years amid studies, disputes and procedural complexities, is set to move forward with construction after receiving its generation licence. The Department of Electricity Development granted the generation licence for the project to Uttarganga Power Company Limited, a subsidiary of the Nepal Electricity Authority, on August 5.

The Uttarganga project has been under discussion since 2004 but could not move ahead for a long time due to disputes over water utilization and the project’s infrastructure. There had been disagreement over whether the water of the Uttarganga River should be diverted toward the Bheri River or toward the Nisikhola River. With the latest decision, the project’s structure for diverting the water toward Nisikhola for power generation has been formally finalized.

According to Badri Kuikel, information officer at the Department of Electricity Development, the 828 MW project has been granted its generation licence. The government is preparing to initiate the tendering process for construction of the project within the current fiscal year. With the generation licence providing the necessary procedural basis for construction, financial closure and the contracting process are now expected to gain momentum.

The project’s detailed project report has been prepared with plans to collect water from the Uttarganga River in the Dhorpatan Valley of Dhorpatan Municipality, Baglung, and divert it into the Nisikhola River for power generation.

Under the project, a high dam will be constructed on the Uttarganga River to create a reservoir. Water stored in the reservoir will be diverted toward Nisikhola through a 6.51-kilometer-long main tunnel and used to generate electricity.

The project’s Environmental Impact Assessment report has already been approved. The EIA report approved on January 16, 2024, also adopted the structure of diverting water from the Uttarganga River toward Nisikhola for power generation. The department has also informed Dhorpatan Municipality and Nisikhola Rural Municipality, where the project is located, about the issuance of the generation licence.

As the Uttarganga project is both a reservoir and inter-basin water transfer project, it is regarded as strategically important for Nepal’s electricity system.

Reservoir projects can play an important role in reducing dependence on electricity generation only during the monsoon, when river flows are high, and enabling relatively stable power generation during the dry winter months. For this reason, the government has continued to prioritize Uttarganga as one of Nepal’s important and relatively low-cost reservoir hydropower projects.

Nepal faces a seasonal imbalance in electricity generation, with output increasing during the monsoon but declining in winter as river flows fall. In such circumstances, projects like Uttarganga, which can store water in a reservoir and generate electricity according to demand, are expected to help maintain seasonal balance in the power system. Electricity generated by the project could help manage domestic demand while also strengthening the basis for future power exports.

The government is preparing to complete financial arrangements and advance construction and contracting processes for major hydropower projects, including Uttarganga, within the current fiscal year. Along with the 828 MW Uttarganga project, the government plans to move the 1,061 MW Upper Arun, 210 MW Chainpur Seti, 99 MW Tamakoshi-5 and 77 MW Ghunsakhola projects into the construction process.

With the issuance of the generation licence, a major procedural obstacle to the construction of the Uttarganga project, which has been under discussion for nearly two decades, has been removed.

The project’s actual progress will now depend on financial closure, the tendering process and the timeline for entering the construction phase.

As the government plans to initiate the tendering process within the current fiscal year, Uttarganga is now expected to move from the stages of study and dispute into the construction phase.

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