On Sunday, Nepal signed a deal with a Chinese company to construct a 1,200-megawatt hydroelectric project. Nepal’s Ministry of Energy signed a memorandum of understanding with China Gezhouba Group Corporation for the development of the 1,200-MW Budhigandaki Hydroelectric Project.
This agreement was signed in the presence of outgoing Nepal Prime Minister Pushpa Kamal Dahal “Prachanda” and Chinese Ambassador to Nepal Yu Hong.
The Budhigandaki Project has been touted as a key project to resolve the perennial power crisis in Nepal.
According to the agreement, the storage project would be constructed under engineering, procurement, construction and finance model. Under this model, CGGC will help arrange funds to develop the project. The funds will be mobilised in the form of a soft loan or commercial loan from Chinese financial institutions on terms and conditions acceptable to the Nepal government.
CGGC is also responsible for the entire execution of the project. Notably, the MoU has given one year to the Chinese developer to conduct an assessment of the hydropower project and arrange funds. This understanding, according to energy ministry officials, will not bind the government legally or financially to hand over the project to the Chinese company for construction, as the final agreement is yet to be signed.
As per reports, the government has allocated Rs. 5.33 billion for the project’s development in the current fiscal. CGGC is currently building 30-MW Chameliya Hydropower Project in the far west and 60-MW Upper Trishuli 3A Hydropower Project in the central region.
The government has been raising infrastructure tax of Rs. 5 from sales of every litre of petrol, diesel and aviation fuel to collect funds for the project.
