The modality has been prepared with a loan and equity ratio of 70 and 30 percent, based on the total cost including interest over the construction period.
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The investment modality for the 1,200 MW Budhi Gandaki Reservoir Hydropower Project has been prepared. The investment modality has been prepared to be constructed with domestic investment.
Minister for Energy, Water Resources and Irrigation Kulman Ghising, after taking information about the proposed investment modality prepared along with the financial analysis of the project, directed it to be submitted for necessary approval. He said that since both projects have been in the news for a long time, the investment modality should now be finalized and taken to construction.
It has been proposed to raise investment in the project by issuing shares of the Nepal Electricity Authority, issuing energy bonds, taking loans from banks and financial institutions, providing concessional loans by the government, raising funds collected from the infrastructure tax levied on petroleum products, issuing shares to foreign employed and non-resident Nepalis and the general public.
The basic cost of the Budhi Gandaki reservoir hydropower project to be built in Dhading and Gorkha is $2.77 billion (about Rs. 374 billion).
The construction period of the project is 8 years. The project cost is Rs. 406 billion, including interest during the construction period of Rs. 32 billion. 6. The modality has been prepared with a loan and equity ratio of 70 and 30 percent based on the total cost including interest during the construction period. The government will own 80 percent and the NRA will own 20 percent of the shares in the project promoter Budhi Gandaki Company Limited.
After the project is completed or in the final stage of construction, taking into account the actual financial indicators, it has been proposed to reduce the debt burden by issuing some percent of the shares to the general public based on suitability and feasibility or to restructure the government's shares.
The government will invest a total of 248 billion rupees in the project, including 97.47 billion rupees for equity and 150 billion rupees for concessional loans. It has been proposed to convert the 45 billion rupees invested in the project by the government into shares in the company.
It is proposed that the government should also invest the amount for customs and value added tax in this project during the construction of the project. It has been proposed to allocate 50 percent of the infrastructure tax levied at customs points on the import of petroleum products for investment in the project.
Reducing the current investment will ensure the government's investment in the project of Rs 228 billion. The Authority will invest Rs 24.37 billion in equity in the project. It has been proposed to issue an energy bond of Rs 30 billion to be calculated on the mandatory liquidity ratio with the government's facilitation to reduce the financial cost.
The bond can be purchased by banks and financial institutions, insurance and reinsurance companies and public funds. Banks and financial institutions will provide loans of Rs 104 billion. It has been proposed to raise funds through co-financing of Employees Provident Fund, Citizens Investment Fund, Social Security Fund, Insurance and Reinsurance Company, HIDCL, Nepal Telecom and commercial banks. The project will generate 3.38 billion units of electricity, including 1.41 billion units in the winter season and 1.97 billion units in the rainy season. The electricity purchase and sale rate has been proposed to be 12.40 and 7.10 rupees per unit for the winter season and rainy season respectively. Thus, after the start of electricity generation from the project, an annual income of 31.48 billion rupees will be generated. The project's power generation license has been proposed to be for fifty years. If the project is completed within 8 years, electricity will be generated for 42 years. The detailed project report and tender documents of the project are under preparation. The progress of land acquisition, which is considered the most complex part of the project, is about 90 percent. 42 billion 65 rupees has been distributed to the landowners as compensation for land, structures, plants and fruits. 8,117 households in Gorkha and Dhading will be physically and financially affected by the project. Of these, 3,560 households will be completely displaced.
Budhi Gandaki is also of strategic importance from the perspective of energy security due to its proximity to electricity load centers such as Kathmandu, Chitwan, and Pokhara. A 263-meter-high curved arch dam will be built to block the Budhi Gandaki River, which flows through the border of Gorkha and Dhading districts. This will affect the former 14 VDCs of Dhading (currently 4 rural municipalities and 1 municipality) and 13 VDCs of Gorkha (currently 4 rural municipalities).
After the dam is built, the reservoir of water that will be trapped will spread over 63 square kilometers in the upper coastal area. The 63 square kilometers that will be built in Budhi Gandaki will provide employment, business, tourism hub, fisheries, and lower coastal benefits. The maximum water level of the project will be up to 540 meters.
