The Department of Electricity Development has started construction with 20 percent government funding, 80 percent loan from the Saudi Fund for Arab Development, and 80 percent from the Kuwait Fund for Arab Economic Development.
What you should know
The construction of the 20-megawatt Budhiganga Hydropower Project, which has been in the news for three decades, has finally begun. The Department of Power Development has started construction with a 20 percent loan from the government, 80 percent from the Saudi Fund for Arab Development and 80 percent from the Kuwait Fund for Arab Economic Development. The contract for the project was signed on 29 Bhadra under the Engineering, Procurement and Construction (EPC) model.
The contract was canceled three times before due to various reasons. Now, the fourth contract has been signed between the Chinese company Super Power Engineering Construction and the Nepali company Baniya Nirman Sewa Pvt. Ltd. (Makawanpur). This is a 100% government-owned hydropower project that the department has started construction of.
The contractor has taken full responsibility from project design to construction, said Surendra Ghimire, head of the Budhiganga Hydropower Project. He said that both companies are aiming to complete the project within 42 months. ‘Since the agreement has been made under the EPC model, there is no excuse for extending the time period,’ he said, ‘the work will be faster in this model.’
As per the EPC agreement, the contractor will bear full responsibility for the project by designing (engineering), purchasing materials (procurement) and constructing (construction). The contractor will ensure that the project will be completed within 42 months, maintaining quality and controlling costs. ‘The EPC model provides the facility to proceed with work in parallel. While the dam and powerhouse are being constructed, equipment procurement, installation and testing will also be conducted, said Project Chief Ghimire, adding, “This saves time for the project. It reduces risk and reduces the contractor’s excuses for delay or cost increase.”
Ghimire said that the contractor’s technical team has already visited the project site twice. He said that this will make it easier for the construction company to work on the project’s materials, geo-system and scope of work. The project will be divided into two lots. The first lot will be given priority to the structure (civil works).
This includes the construction of the dam, access road and powerhouse. The second lot will include the installation, testing and operation of mechanical and electrical equipment. The work of turbines, generators, control panels, protection systems, and transformers will be done. The work of both these lots will proceed in parallel, said Project Chief Ghimire. Work has started at the construction site after the latest challenges of contract process and agreement delays have been resolved. He said that preparations have been started for the construction of access roads, expediting the design approval process, and supplying construction materials.
Earlier, the project had canceled the contract process that had been postponed three times. According to the project office, there are different reasons for the cancellation of the contract three times. The first time was due to lack of competition, the second time due to excessive cost proposals, and the third time due to rejection by the main lender (Saudi Fund for Arab Development).
Although the project was planned to start in 2013, it took almost 5 years to prepare the Detailed Project Report (DPR). Although the DPR was prepared in 2077, work could not start for the next 3 years. A loan agreement of 6 billion Nepalese rupees was signed with the Saudi Fund for Arab Development on June 18, 2014 for the construction and development of the project.
The Australian company Smack International and the Nepali company Udaya Consultancy, which were entrusted with the task of preparing the DPR in 2073 Poush under an agreement signed on June 14, 2072, prepared the DPR only in 2077. The cost of the DPR of the project is 199.133 million Nepalese rupees.
The study for the construction of this project, which the government plans to build itself, began in 2052 BS. According to the feasibility study and environmental impact assessment study completed in 1997, the estimated cost is about 10 billion Nepalese rupees.
According to the project, after conducting engineering design and environmental impact assessment studies, a loan agreement of 6 billion Nepalese rupees was signed with the Saudi Fund for Arab Development on 18 June 2014 for the construction and development of the project until 2023. On 4 July 2012, a loan agreement of 5 million Kuwaiti dinars (1.8 billion Nepalese rupees) was signed with the Kuwait Fund for Arab Economic Development. Saudi Arabia has extended the date of the loan agreement until 2027. The remaining amount is mentioned in the loan agreement to be borne by the Government of Nepal.
