Even as Nepal has the potential to generate upwards of 40,000 megawatts of hydropower, it has been stuck at generating less than 1,000 megawatts for over two decades. Above, a hydro electricity station on the Bhote Koshi River outside Barabise town near the Nepal-China border. Photo/Conor Ashleigh

Kathmandu, November 11 - The process has begun to terminate the contract with the construction company Patel-Raman JV of Janakpur-9, Dhanusha, for the supply and installation of hydromechanical equipment such as gates, as well as for the construction of civil structures including the dam (headworks) and powerhouse of the national pride project, the Sunkoshi Marin Diversion Multipurpose Project.

The project issued a public notice on Tuesday asking for clarification on why the contract should not be terminated.

The project stated that the process of terminating the contract has been initiated because, even though about 61 percent of the contract period has already passed, the physical progress is extremely low-only around 10 percent. Moreover, the contractor has shown no urgency to accelerate the work, and despite being formally notified to improve performance as per the terms of the contract, no effort or interest has been shown in that direction.

Along with the process of terminating the contract, the project has also initiated proceedings to confiscate a total bank guarantee of Rs. 3.60 billion - which includes Rs. 2.40 billion kept as the Performance Bond Guarantee and Rs. 1.20 billion as the Advance Payment Guarantee - deposited by Patel–Raman JV.

After observing the unusual delay in the construction of the project, Minister for Energy, Water Resources and Irrigation; Physical Infrastructure and Transport; and Urban Development, Kulman Ghising, held a discussion on September 23, 2025 with ministry secretaries, the Director General of the Department of Irrigation, the project chief, consultants, and the contractors.

Although the tunnel construction had already been completed, the project had been left stranded due to the failure to construct key structures such as the dam and powerhouse. The minister had indicated that the project should move forward with new alternatives and a fresh approach.

A contract worth Rs. 14.08 billion (including taxes) had been signed with Patel–Raman JV for the construction of the project. Patel–Raman JV had bid about 32 percent lower than the estimated cost. The contractor began work in January–February 2023, and according to the agreement, the construction was to be completed by June–July 2027. However, the physical progress so far is only around 10 percent. To date, payments totaling Rs. 2.14 billion (about 15 percent of the contract amount) have been made.

The project’s 13.3-kilometer tunnel was excavated using a tunnel boring machine (TBM) and was successfully completed on May 8, 2024. The plan is to construct a dam on the Sunkoshi River, located at the border of Sindhuli and Ramechhap districts, divert its water through the tunnel into the Marin River, and then channel it to the Bagmati Irrigation Project.

The goal is to provide year-round irrigation to a total of 122,000 hectares of land in Dhanusha, Mahottari, Sarlahi, Rautahat, and Bara districts - including the currently irrigated 45,600 hectares.

Water from the Sunkoshi River will be diverted into the Marin River to generate 31 megawatts of hydroelectric power. The project aims to provide year-round irrigation facilities to the fertile lands of five districts in Madhesh Province, thereby increasing agricultural productivity, significantly improving farmers’ livelihoods, generating hydropower, contributing to the nation’s overall economy, and promoting regional balance.

For these reasons, the Sunkoshi Marin project has been implemented as a National Pride and transformative project. The estimated cost of the project is Rs. 49.42 billion.