Nepal preparing MoU with NHPC and state-run VUCL to develop hydropower project

PTI, February 24, 2023, Kathmandu:  Nepal is preparing an MoU in which India's hydroelectric major NHPC will collaborate with state-run VUCL to develop a 480 MW semi-reservoir hydropower project in the western part of the country at an estimated cost of Rs 92 billion, an official said on Friday. 

The move comes days after Nepal and India inked an agreement to increase the power import and export capacity through the Dhalkebar-Muzaffarpur transmission line from 600 MW to 800 MW. 

"Our government has asked NHPC (National Hydroelectric Power Corporation), a government of India company, to collaborate with Nepal's Vidyut Utpadan Company Ltd (VUCL), to develop a hydropower project," Baburaj Adhikari, information officer at the Ministry of Energy, Water Resources and Irrigation told PTI.

According to the draft MoU, the Nepal government is planning for a 51:49 NHPC-VUCL joint venture.

If this MoU gets inked, the Phukot Karnali Hydropower Project, which is a semi-reservoir project with a capacity of 480 MW, will be constructed in Sani Triveni Rural Municipality-1 of Kalikot district in Nepal. 

The feasibility study of the project has been completed, Adhikari said.     

A 520-metre test tunnel was dug, and a plan to construct a 160-metre-high dam in Sisnegada of Sani Triveni Rural Municipality-3 and channel it through a 13.5 km tunnel to the power plant that would be constructed in Bhautegada of Sani Triveni Rural Municipality, he said.     

"The estimated cost of this project is around Rs 92 billion, which is expected to be completed within five years after the start of construction," Adhikari explained.

The draft of a Memorandum of Understanding (MOU) for investment with Nepali companies was being prepared, he said.     

According to the draft MoU, Nepal will get 21.9 per cent free energy monthly from the project. 

In it, NHPC will have to manage the market of the electricity generated from the project and the loan required to build the project on behalf of the promoter company.     

If Nepal wants to consume the electricity of the project by itself, it will have the right to buy it, it said.

The project's surplus electricity will be exported to India, it added. Nepal became an energy surplus country ever since the 456MW Upper Tamakoshi Hydropower Project came into operation in August last year.