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Nepal inks deal with Chinese firm to build 1,200MW hydroelectric project

Published 06 June 2017

Nepal has inked a deal with China Gezhouba Group Corporation (CGGC) to construct the 1,200MW Budhi-Gandaki hydroelectric project.

Nepal’s Energy Minister Janardan Sharma signed a memorandum of understanding (MoU) with CGGC President Lv Zexiang for the development of the mega hydroelectric project, The Kathmandu Post reported.

According to the agreement, the hydroelectric project will be constructed under engineering, procurement, construction and finance (EPCF) model. Under the model, CGGC will assist in arranging funds needed to develop the project.

The project, which will address perennial energy shortage in the country, is estimated to cost $2.5bn.

The funds required for the project will be raised through soft loan or commercial loan from Chinese financial institutions.   

As per the MoU, the Chinese developer has been given one year’s period to carry out assessment of the project and arrange funds needed for its development.

A source familiar with the matter was quoted by the publication as saying: “We will enter into a separate agreement if the financial proposal presented by the Chinese developer is agreeable to us,”

Recently, the Nepal government has decided to award the project to a Chinese developer, avoiding an international bidding.

Currently, CGGC is constructing two hydropower projects in the country that include 30MW Chameliya Hydropower Project in the far west and 60MW Upper Trishuli 3A Hydropower Project in the central region.

For the current fiscal year, the government has set aside a budget of Rs. 5.33 billion for the development of Budhi-Gandaki hydroelectric project.

The country’s Energy Ministry spokesman Dinesh Kumar Ghimire was quoted by AFP as saying that a financing agreement for the project will be signed later.


Image: Currently, CGGC is constructing two hydropower projects in the country. Photo courtesy of domdeen/FreeDigitalPhotos.net.