KATHMANDU: Minister for Energy, Water Resources and Irrigation Kulman Ghising has directed authorities to immediately finalize and submit the investment modality for the Kimathanka Arun Hydropower Project, following the preparation of a financing framework to build the project using domestic capital.
The 454-megawatt semi-reservoir-based Kimathanka Arun Hydropower Project has been identified at Bhotkhola Rural Municipality-2 of Sankhuwasabha district. The project is planned to be developed with full domestic investment, marking one of the largest hydropower initiatives to be financed internally.
Including interest during construction, the estimated cost of the project stands at Rs 97.94 billion. The project will be implemented directly by the Electricity Generation Company, a state-owned entity with the government and public institutions as promoters.
Under the proposed financial modality, 70 percent of the total cost, around Rs 68.55 billion, will be raised through loans, while the remaining 30 percent, amounting to Rs 29.38 billion, will be mobilized as equity.
The loan portion is proposed to be arranged through co-financing from the Hydroelectricity Investment and Development Company Limited (HIDCL), Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies, and banks and financial institutions.
Similarly, the equity portion will be raised by issuing shares to the company’s promoters, non-resident Nepalis and Nepalis employed abroad, local residents of project-affected districts, members of ultra-poor households, and the general public.
While receiving a briefing on the proposed investment modality along with its financial analysis, Minister Ghising instructed officials to update the project’s estimated cost and immediately proceed with the financial management process accordingly. He also stressed the need to secure approval of the investment framework and the corresponding institutional equity plan from the company’s board of directors without delay.
Noting that the Electricity Generation Company holds licenses for multiple hydropower projects but has yet to commence construction on any of them, Minister Ghising said developing the Kimathanka Arun project on its own is crucial for the company’s long-term income generation and sustainability.
The study and pre-construction works of the Kimathanka Arun project have already cost Rs 731.4 million. Land acquisition has been completed for the project office and staff residential camp. Compensation and resettlement rates have also been determined for land required for the dam, reservoir, powerhouse and other structures, with around Rs 450 million estimated for this purpose.
Once operational, the project is expected to generate 2.69 billion units (2,690.97 GWh) of electricity annually. Of the total generation, winter peak and off-peak energy will account for 473.1 million units and 353.3 million units respectively, while monsoon season generation is estimated at 1.8646 billion units. Annual revenue from electricity sales is projected at Rs 16.91 billion.
In the Electricity Generation Company, the Government of Nepal holds a 30 percent stake, while the Nepal Electricity Authority, Employees Provident Fund and Nepal Telecom each own 10 percent. The Citizen Investment Trust holds 5 percent, HIDCL 4 percent, and Rastriya Beema Company 2 percent. A total of 29 percent of shares have been allocated for the general public.
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