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Nepal government cleared GMR Company proposal to build 900 MW Upper Karnali HEP in Nepal

Sep 19, 2014 14:31 IST

Nepal government cleared GMR Company proposal to build 900 MW Upper Karnali hydroelectric power plant (HEP) in North-West Nepal. The proposal approved by Nepal Cabinet on 18 September 2014 is a part of foreign investment scheme in Nepal aimed at exporting electricity to India.

With the Nepal Cabinet passing the proposal, now the Investment Board Nepal will sign a Project Development Agreement (PDA) with GMR to construct transmission lines across the border to transmit the electricity to India.

The GMR is expected to complete the project in 2021 and will provide 12 percent energy free to Nepal to ease a crippling power shortage in Nepal. Rest of the electricity will be exported to India. According to the agreement, the GMR will give 27 percent of stake of the project to Nepal.

The GMR also will build a separate power house to generate two megawatts of electricity to be supplied to villagers in Achham, Surkhet and Dailekh districts where the project will be located.

Significances of the approval

The approval of Nepal cabinet allowing GMR Company to build hydro power project in Nepal paves the way for other Indian companies to invest in powers sector in Nepal. For instance, Satluj Vidyut Nigam Limited along with other companies have plan to build HEP plants totaling 42000 MW.

Besides, the approval will bring Indian companies in direct contention with Chinese companies who are competing with New Delhi to influence Nepal through investment in power infrastructure in Nepal. For instance Three Gorges Dam International is also in talks with Investment Board Nepal to build a 1.6 billion US dollars dam to generate 750 MW of electricity on the West Seti River in Nepal.


Earlier in 2008, the government of Nepal agreed to allow GMR to construct the 900 megawatt (MW) Upper Karnali hydroelectric power plant. However, due to the political instability in Nepal, the clearance for the project got delayed.

Then once again, the agreement was expected to be signed during Prime Minister Narendra Modi’s visit in August 2014 but was delayed because some political parties wanted to ensure that the supply of water to irrigation canals on the same river would remain unaffected by the dam, as well as other benefits to Nepal.

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