Construction of the 20-MW Budhiganga Hydropower Project, which has been under discussion for three decades, has finally begun. The Department of Electricity Development has started construction with 20% investment from the Government of Nepal and 80% loan investment from the Saudi Fund for Arab Development and the Kuwait Fund for Arab Economic Development. The project’s contract agreement under the Engineering, Procurement, and Construction (EPC) model was signed on 11 September.

Earlier, the contract had been canceled three times for various reasons. Now, the fourth contract has been signed between the Chinese company Super Power Engineering Construction and the Nepali company Baniya Nirman Sewa Pvt. Ltd. (Makwanpur). This is a fully government-owned hydropower project being constructed by the Department.

Budhiganga Hydropower Project Chief Surendra Ghimire said that the contractor has taken full responsibility from the project’s design to its construction. According to him, both companies have set a target to complete the project within 42 months. “Since the agreement has been made under the EPC model, there will be no excuses for deadline extensions,” he said. “Work will progress faster under this model.”

According to the EPC agreement, the contractor will take full responsibility for the project’s design (engineering), procurement of materials, and construction. The contractor will ensure completion of the project within 42 months, maintain quality, and keep costs under control. “The EPC model allows work to progress in parallel. While the dam and powerhouse are being constructed, equipment procurement, installation, and testing will also take place,” Project Chief Ghimire said. “This saves project time, reduces risks, and minimizes excuses for delays or cost overruns by the contractor.”

Ghimire said that the contractor’s technical team has already conducted two field visits to the project site. According to him, this will help the construction company work more efficiently in terms of materials, terrain, and the project’s work areas. The project will be carried out in two lots. The first lot will prioritize structural (civil works) construction.

This includes the construction of the dam, access road, and powerhouse. The second lot will involve installation, testing, and operation of mechanical and electrical equipment. This will include work on turbines, generators, control panels, protection systems, and transformers. Project Chief Ghimire stated that work on both lots will move forward in parallel. With recent challenges related to the contract process and agreement delays resolved, work has now begun at the construction site. He said that preparation has started for access road construction, accelerating the design approval process, and supplying construction materials.

Earlier, the project had canceled the procurement process three times. According to the project office, each cancellation had different reasons. The first time, it was due to a lack of competition; the second time, due to excessively high cost proposals; and the third time, the contract could not be finalized because the main lender - the Saudi Fund for Arab Development - did not approve it.

Although the project was planned to begin in 2013, it took nearly five years to prepare the Detailed Project Report (DPR). Even though the DPR was completed in 2020 , work could not start for the following three years. For the project’s construction and development, a loan agreement of 6 billion Nepali rupees had already been signed with the Saudi Fund for Arab Development on June 18, 2014.

whereas the agreement was signed on 29 June 2015, the Australian company SMEC International and the Nepali company Uday Consultancy - who were tasked with preparing the DPR by Dec- Jan 2016 - were able to complete the DPR only in 2020. The cost of preparing the project’s DPR itself is 199.133 million Nepali rupees.

The government had planned to construct this project on its own, and studies for it had begun as early as 1995. According to the feasibility study and environmental impact assessment completed in 1997, the estimated cost of the project is around 10 billion Nepali rupees.

According to the project, after conducting the engineering design and environmental impact assessment, a loan agreement of 6 billion Nepali rupees was signed with the Saudi Fund for Arab Development on June 18, 2014, for the project’s construction and development, valid until 2023. On July 4, 2012, a loan agreement of 5 million Kuwaiti dinars (1.8 billion Nepali rupees) had already been signed with the Kuwait Fund for Arab Economic Development. The Saudi Fund has extended the loan agreement until 2027. The remaining amount will be borne by the Government of Nepal, as specified in the loan agreements.

Kantipur