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The 670 MW Dudhkoshi Reservoir Hydropower Project, planned at Rabhuwaghat on the Dudhkoshi River along the border of Khotang and Okhaldhunga districts, is set to move forward.

The project gained momentum after the Government of Nepal included it in the budget for fiscal year 2083/84 (2026/27), announced on Friday.

Finance Minister Dr. Swarnim Wagle has prioritized the Dudhkoshi Reservoir Hydropower Project in the national budget. Through his budget speech, he stated that a tender would be called this year to advance the project's implementation.

An agreement between the Government of Nepal and investors for the multipurpose hydropower project was reached during the tenure of former Finance Minister Barshaman Pun. The project will be developed at Rabhuwaghat, located on the border between Lamidanda (Ward No. 3 of Rawa Besi Rural Municipality, Khotang) and Bhadoure (Ward No. 6 of Chisankhugadhi Rural Municipality, Okhaldhunga).

The Dudhkoshi project was first studied about 43 years ago. Financial institutions, including the Asian Development Bank (ADB), have expressed interest in investing in it.

The process of acquiring approximately 25,000 ropanis of land - both government-owned and privately owned - in Khotang, Okhaldhunga, and Solukhumbu districts has already begun. According to the Nepal Electricity Authority, around 20,000 ropanis of privately owned land will need to be acquired in addition to government land.

Due to budget constraints, compensation for private landowners had not been determined for a long time, raising concerns that the project might never be built. Although compensation has not yet been finalized, the government has imposed restrictions on buying and selling land affected by the project.

Local landowners have complained that the government halted land transactions but delayed determining compensation, creating difficulties for affected residents. The inclusion of the project in the new budget has nevertheless been welcomed by local people.

The Dudhkoshi project has been designated a National Pride Project by the government. An all-party meeting convened to gather recommendations on compensation concluded that land values should be determined according to the Land Acquisition Act, 2034 (1977), taking into account prevailing market prices, valuations by banks and financial institutions, actual transaction prices in the district, and government rate schedules.

Land transactions on the Khotang side have been suspended since June/July 2021, while a notice for land acquisition on the Okhaldhunga side was issued in February/March 2022. Local representatives say compensation has not been finalized because expectations of landowners differ from the provisions of the Land Acquisition Act.

Preliminary studies indicate that 162 households will be fully displaced and 988 families will be partially affected by the project. As a multi-year project, it is also expected to submerge cultivable land belonging to approximately 1,050 families.

The project involves constructing a 220-meter-high dam at Rabhuwaghat. Water from the reservoir will be diverted through a tunnel and released at Dhitung in Halesi Tuwachung Municipality–9 to generate electricity.

According to the Nepal Electricity Authority, the project is expected to produce approximately 3.443 billion kilowatt-hours (kWh) of electricity annually.

Once operational, the project is expected to provide not only electricity but also opportunities for boating, fish farming, and tourism development across the three districts. Authorities believe that tourists visiting Halesi and Mount Everest could enjoy boating activities on the Dudhkoshi reservoir.