Nepal Electricity Authority (NEA) has granted approval for commercial operation of the 3.3-megawatt Syarpu Hydropower Project, located in Banfikot Rural Municipality-3 of Rukum West. The project, developed through joint investment by local governments in Rukum West and promoted by Syarpu Power Company, has given concrete shape to the local governments’ investment in a sustainable source of internal revenue.
According to Dhanbir Oli, chairman of Syarpu Power Company, the test production of electricity from the project has been successfully completed and the NEA has granted permission for commercial operation.
The total cost of the project has reached around Rs. 620 million. Of the total investment, 70 per cent, amounting to Rs. 435.9 million, has been financed through bank loans, while the remaining amount has been raised through equity investment.
As local governments have jointly invested in hydropower, the Syarpu project is also being viewed as a new financial model. The process of developing the project began in 2021, and it was inaugurated by then minister Janardan Sharma on December 11, 2023.
Six local governments in Rukum West and the District Coordination Committee hold a combined 54 per cent stake in Syarpu Power Company, while the federal government’s Ministry of Finance has invested one per cent.
According to Pradip Oli, chief executive officer of Syarpu Power Company, the project is expected to generate around 18.17 million units of electricity annually and earn approximately Rs. 101.5 million a year.
The project is a run-of-river type hydropower scheme with an installed capacity of 3.3 MW. It has a design discharge of 1.40 cubic metres per second and a gross head of 283.20 metres.
The electricity generated by the project has been connected to the national grid through a 33 kV transmission line.
A structure has been built to transmit electricity from the powerhouse to the national grid via the Banfikot substation. The company has also signed a power purchase agreement with the NEA.
Annual revenue source for local governments
Among the local governments, Chaurjahari Municipality has made the highest investment of Rs. 62.9 million, followed by Sanibheri Rural Municipality with Rs. 49.6 million.
Similarly, Banfikot Rural Municipality has invested Rs. 27.9 million, Aathbiskot Municipality Rs. 20.5 million, Triveni Rural Municipality Rs. 18.2 million and Musikot Municipality Rs. 5 million.
The Ministry of Finance has invested Rs. 2.2 million in shares, while the District Coordination Committee has invested Rs. 6.17 million.
The remaining 45 per cent of the company’s shares will be offered to the general public through an initial public offering (IPO). The company said it would move ahead with the share issuance process after the commencement of commercial production and the connection of electricity to the national transmission grid.
The project is expected to provide dividends to local governments, create opportunities for local residents to invest in shares and improve electricity supply in the area.
Member of the House of Representatives Gopal Sharma said the initiative, aimed at making local governments financially self-reliant while increasing income and employment opportunities for people in Rukum, had achieved historic success.
He said the Syarpu Hydropower Project, launched through the joint initiative, participation and decisions of local governments, was a model project for the country.
Mayor of Chaurjahari Municipality Pushpa Badi said the investment made by local governments would serve as a foundation for long-term internal revenue.
According to Badi, the investment is expected to be recovered within the next few years once the project comes into regular operation. Thereafter, the dividends received from the project will become a permanent source of internal revenue for the municipalities.
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