The government is moving forward with plans to construct the 10,800 MW Karnali-Chisapani Multipurpose Project (KCMP) under a financing modality that will involve investments from Nepal, India, Bhutan, Bangladesh, and Sri Lanka.

According to the Ministry of Energy, Water Resources and Irrigation, a new financing model is being developed to allow for joint investment by multiple stakeholders in the mega project. Energy Minister Dipak Khadka stated that this transformative cross-border collaboration will enhance regional energy security while also improving irrigation capacity, enabling inland water transport, and promoting environmental sustainability.

Minister Khadka said five South Asian countries are coming together to invest in the Rs 2,000 billion project. “This landmark initiative will fuel national prosperity and usher in a new era of sustainable growth and shared economic progress,” he wrote on social media platform X.

The game-changing project has been under discussion for over six decades. However, Nepal has faced significant challenges in executing a project of this scale due to limited domestic resources and technical expertise. In recent years, the Nepal Electricity Authority (NEA) has accelerated its study of the KCMP, which is poised to become the largest hydropower project in South Asia.

A study conducted in 1989 found that the project would affect a total of 11,570 hectares of land and impact around 54,600 residents in the districts of Bardiya, Kailali, Surkhet, Achham, and Doti. The reservoir of the proposed project would be located approximately two kilometres upstream of the Karnali-Chisapani Bridge, which connects Bardiya and Kailali.

As part of the project, a 270-metre-high dam would be constructed on the Karnali River. The reservoir is expected to stretch 167 kilometres in total—100 kilometres on the Karnali River, 45 kilometres on the Bheri River, 16 kilometres on the Seti River, and six kilometres on the Thuligad River.

The project also includes the construction of an underground powerhouse on the bank of the Karnali River. A 1,200-metre-long tunnel will be built to channel water to the powerhouse. Additionally, a 765 kV transmission line will be installed to evacuate electricity generated by the project.

According to a preliminary study, the KCMP is expected to take nine years to complete. The cost of electricity generation is estimated at Rs 106.2 million per megawatt—almost half the current cost of over Rs 200 million per megawatt. Besides electricity generation, the project is projected to irrigate 191,000 hectares of land in Nepal and 320,000 hectares in India.

If realized, this multipurpose project will help Nepal meet its goal of transitioning to green energy while also supporting cross-border electricity trade. Nepal has committed to achieving net-zero carbon emissions by 2045. Following the signing of a long-term power trade agreement with India, the country aims to export 10,000 MW of electricity to its southern neighbor over the next decade.