Kathmandu. The 683 MW Sunkoshi-3 reservoir-based hydropower project, identified on the border of Kavrepalanchok and Ramechhap, is now on a clear path toward construction. Nepal and Bangladesh have agreed to jointly build the project.
The meeting of the Nepal–Bangladesh Energy Secretary-level Joint Steering Committee (JSC), held in Dhaka, Bangladesh on November 27, decided to move forward with the investment process to advance the project’s construction.
During the seventh meeting of the JSC—which oversees bilateral discussions on energy cooperation between Nepal and Bangladesh—it was decided to quickly finalize the Joint Venture Agreement (JVA) for the project’s development. Additionally, Bangladesh will form an expert committee to evaluate the project.
From Identification to Development
The Japan International Cooperation Agency (JICA) first identified the project in 1985 during the Koshi River Water Resources Development Study. Although JICA updated the study in 2014, a formal feasibility study began only in 2017.
In 2021, the Government of Nepal proposed developing the project in partnership with Bangladesh. Since then, studies, reviews, and environmental clearance processes have moved forward through a secretary-level mechanism.
Survey License and Investment Structure
The Department of Electricity Development under the Ministry of Energy granted a survey license to the Nepal Electricity Authority in November/December 2023, valid until December 10, 2025. The Authority paid about 700 million rupees to the government for the survey rights.
The estimated cost of the project is about USD 1.458 billion, of which USD 580 million is allocated for civil structures, USD 174.9 million for hydro-electromechanical and transmission infrastructure, and USD 370 million for social and environmental management.
Dam, Reservoir, and Technical Features
A 180-meter-high dam will be constructed at Lubhughat, about one kilometer from Nepalthok on the BP Highway, on the border of Khandadevi (Ramechhap) and Temal Rural Municipality (Kavre). The dam will block the Sunkoshi River, creating a reservoir roughly 45 kilometers long.
The reservoir will extend upstream to above Balefi Bazaar in Sindhupalchowk and to Sipaghat on the Indrawati River. About 570 cusecs of water will be diverted to the powerhouse through a 1.1-kilometer-long, 9-meter-diameter tunnel, generating 683 MW of electricity. Annual generation is expected to reach 2.3562 billion units.
EIA Approval and Social Impact
The legal pathway for project construction opened after the Ministry of Forests approved the Environmental Impact Assessment (EIA) in October/November 2022. According to the EIA report, residents of 45 wards across 13 local levels in four districts will be affected. A total of 3,237 hectares will be inundated, including around 3,300 hectares of private land and 655 hectares of forest area. The study estimates that about 11,700 people will be displaced.
Investment Summit and Energy Diplomacy
International interest in the project increased after it was included in the Investment Summit held in Kathmandu in 2018. Since the Energy Cooperation Agreement of 2018, Bangladesh has shown strong interest in developing reservoir-based hydropower projects with Nepal. For this reason, both countries appear eager to finalize the upcoming JV agreement, recognizing energy as a key pillar of diplomatic cooperation.
Urjasanchar