The government has set an ambitious target of generating 28,500 MW of electricity, yet one of Nepal’s most strategic hydropower projects—the Budhigandaki storage project—remains stalled in prolonged uncertainty. With a proposed capacity of 1,200 MW, Budhigandaki is not merely a power project; it is a cornerstone for strengthening energy security, accelerating economic transformation, and sustaining long-term development. However, despite being under discussion for over a decade, it has yet to enter the construction phase, raising pressing questions about policy commitment and execution. First conceptualised in the early 2000s, the project gained momentum after the formation of a development committee in 2012, when it was designated a national pride project. Since then, key groundwork—such as compensation distribution, preliminary studies, and cost revisions—has largely been completed. Nearly 95 percent of affected households in Gorkha and Dhading have received compensation. Yet, the project remains stalled, primarily due to indecision over its financing modality, policy inconsistencies, and weak political will. Earlier plans to develop the project through foreign investment, including agreements with Chinese companies, were scrapped in 2017 when the government opted for domestic financing. While this decision strengthened national ownership, the failure to establish a clear and timely investment framework has significantly delayed progress.
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The project’s base cost is estimated at 2.77 billion US dollars (approximately Rs 377 billion), with a financing structure of 70 percent debt and 30 percent equity. The government is expected to hold 80 percent equity, with the Nepal Electricity Authority retaining the remaining 20 percent. Including interest during construction, the total cost could rise to around Rs 406 billion. To mobilise resources, the government has been collecting an infrastructure tax on fuel and plans to utilise concessional loans, energy bonds, and commercial borrowing. While the financing strategy appears viable, delays in execution have undermined its effectiveness. Planning alone will not suffice—swift and decisive implementation is imperative. Unlike Nepal’s predominantly run-of-the-river hydropower projects, Budhigandaki’s reservoir-based design ensures stable, year-round electricity generation, addressing seasonal supply imbalances. The project is expected to generate around 3.38 billion units of electricity annually, with potential revenue exceeding Rs 31 billion. With a lifespan of 42 years, it offers substantial long-term economic returns. Strategically located near major demand centres such as Kathmandu, Pokhara, and Chitwan, the project would reduce transmission costs and enhance supply efficiency.
Beyond electricity generation, it also holds significant potential for tourism, fisheries, employment, and local economic development. The planned 63-square-kilometre reservoir could itself become a major attraction. At a time when Nepal spends billions annually on fuel imports, accelerating electrification is no longer optional. Expanding the use of electric vehicles, induction cooking, and industrial electrification requires a reliable and sufficient power supply—something only large-scale storage projects like Budhigandaki can ապահով. Further delays will inevitably escalate costs, erode economic opportunities, and weaken prospects for energy export. With a relatively stable government in place, there is little justification for continued inaction. Nepal’s energy sector is at a critical juncture, with expanding electricity trade with India and emerging export opportunities to Bangladesh. Failure to advance large reservoir projects risks squandering this strategic window. The government must now move beyond rhetoric. Budhigandaki should be prioritised, with immediate commencement of construction and a clear timeline for completion. The project must transition from prolonged deliberation to tangible execution—because further delay risks not just a missed project, but a missed national opportunity.
