Kathmandu: The Budhiganga Hydropower Project, originally targeted for completion in 2025, is now expected to take another four years to finish. Although the contract aimed to complete the project within 42 months, it has yet to be achieved.
However, the contract process for the construction of the project has not yet been finalized. The contracting process for the civil and hydro-mechanical works is currently in its final stage. Project Chief Surendra Ghimire informed that the bid evaluation has been completed and a letter of intent for bid approval has been issued. He also mentioned that the approval process with the donor agency is currently underway. This is the fourth time bids have been invited for this contract, as previous bids were cancelled during the pre-qualification stage. The project will be constructed in Sanfebagar-10, Achham.
The 20-megawatt semi-reservoir hydropower project underwent a feasibility study and environmental impact assessment in 1997, conducted by Canadian International Water and Energy Consultants with the support of Metcon Consultants. To implement the project, loan agreements were signed between the Government of Nepal, the Saudi Fund for Development (on June 18, 2014), and the Kuwait Fund for Arab Economic Development (on July 4, 2012), with the agreement set to last until 2025. According to the project, the Saudi Fund has provided the loan at 2% interest, while the Kuwait Fund has offered it at 0.5% interest.
The project requires the consent of the donor agencies at every stage of the procurement process. Accordingly, the draft contract agreement has been sent to the donor agencies for approval in the final stage. They have raised queries twice regarding the draft, to which the project has already responded. The project had sent the draft for approval on April 28, 2025.
Project Chief Ghimire stated that the preparatory phase of the project has taken decades. He explained that the project has been mired in tasks such as feasibility studies and land acquisition. During the conflict period, land registry documents were destroyed in a Maoist attack on Mangalsen in Achham, which delayed the land resurvey required for the acquisition process.
“The main construction work has not yet begun, and no contracts have been awarded,” Ghimire said. “Completing the preparatory phase alone has taken a significant amount of time. Land acquisition, in particular, was a lengthy process. In Achham district, land ownership documents (Lalpurja) were lost and were not available in government offices, necessitating a complete resurvey. This caused delays and also led to an increase in the project’s estimated cost.”
He added that, since the Government of Nepal is also a stakeholder, approval must be obtained from the Ministry of Finance to ensure funding. Additionally, the current legal framework has contributed to further delays in the project.
With the extension of the construction timeline, the project’s cost has also increased. Initially, the estimated cost was NPR 9 billion, divided into three parts: Lot 1 – Civil and Hydro-mechanical Works, Lot 2 – Electro-mechanical Works, and Lot 3 – Transmission Line. However, the cost estimate has now been revised. The total project cost has reached NPR 14 billion.
After the responsibility for constructing the transmission line was handed over to the National Transmission Grid Company, the revised estimate for only the civil, hydro-mechanical, and electro-mechanical works now stands at NPR 9 billion.
Since the government also bears a share of the responsibility, the Ministry of Finance must approve the required funding. Ghimire stated that this process is currently underway.
The process of obtaining necessary approvals from the donor agency has also been initiated. The loan agreement was originally signed for a term lasting until 2025. However, since the project has not yet entered the construction phase, the agreement has been extended until 2027.
Project Chief Ghimire stated that the duration of the foreign loan agreement has been extended, and if necessary, they are prepared to request a further extension.
The project is planned to be constructed in three separate packages under a multi-year contract. The project will proceed using the EPC (Engineering, Procurement, and Construction) model. The detailed engineering design and the environmental impact assessment of the project have been completed and revised.
Out of the total budget allocation of NPR 965,051,000 for the current fiscal year, the average expenditure so far is 15.39 percent. According to the latest data from the Ministry of Finance, the capital expenditure to date is 30.73 percent, while recurrent expenditure stands at 0.05 percent.
So far, the environmental study of the project’s transmission line has been completed. Land acquisition of 327 ropani has been done for the project’s dam and structure site, camp site, office buildings, residential area, Chapartola sub-station in Doti, and access roads to the sub-station. Construction of office buildings, residential buildings, access roads, and bridges for access has also been completed.
Source: Annapurna Post
