Nepal, China sign MoU for construction of Budhigandaki Hydropower Project

Nepal on 5 June 2017 signed a Memorandum of Understanding (MoU) with China for construction of 1200-megawatt Budhigandaki Hydropower Project.

The agreement was signed at Kathmandu, Nepal by Nepal Energy Minister Janardan Sharma and Lv Zexiang, President of China Gezhouba Water & Power (Group) Co Ltd (CGGC).

Highlights of the Project
• Budhigandaki Hydropower Project will be developed on Engineering, Procurement, Construction and Finance (EPCF) model. Under this model, CGGC will help arrange funds required to develop the project.
• As per the MoU, CGGC has one year time to conduct assessment of the hydropower project and arrange necessary funds for its development.
• The funds will be mobilised in the form of soft loan or commercial loan from Chinese financial institutions on terms and conditions acceptable to the Nepal government.
• CGGC will also undertake the overall responsibility of executing the project. It will also conduct additional studies on and investigations into the project, if required.

Comment
The Budhigandaki Hydropower Project is expected to resolve the perennial power crisis in Nepal.

The Nepal Government has allocated a budget of Rs 5.33 billion for the project’s development in the current fiscal year. These funds have been procured by the Nepal Government by raising infrastructure tax of Rs 5 from sale of every litre of petrol, diesel and aviation fuel.

The project is presently in the phase of acquisition of land from locals of Dhading and Gorkha districts of Nepal.