KATHMANDU: The long-awaited 670 MW Dudhkoshi Reservoir Hydropower Project, to be developed at Rabuwaghat on the border of Khotang and Okhaldhunga districts, is set to move ahead after being included in the government’s budget for the fiscal year 2026/27.
Finance Minister Dr. Swarnim Wagle announced through the budget speech that the government would prioritize the project and proceed with the tender process for its implementation.
The multipurpose hydropower project is planned at Rabuwaghat, located between Lamidanda of Rawa Besi Rural Municipality-3 in Khotang and Bhadaure of Chisankhugadhi Rural Municipality-6 in Okhaldhunga.
An agreement between the government and investors for the project was reached during the tenure of former Finance Minister Barshaman Pun. The project, first studied nearly 43 years ago, is expected to receive investment from the Asian Development Bank and other financial institutions.
Land acquisition process underway
The project will require the acquisition of around 25,000 ropanis of land across Khotang, Okhaldhunga and Solukhumbu districts, including both public and privately owned land.
According to the Nepal Electricity Authority, nearly 20,000 ropanis of privately owned land are expected to be acquired for the reservoir-based project.
Concerns had been growing among local residents over delays in determining compensation for affected landowners, largely due to budget constraints. Although compensation rates have yet to be finalized, the government has already imposed restrictions on the sale and transfer of land within the project-affected area.
Local landowners have complained that while land transactions have been halted, compensation determination has remained stalled for years.
The project’s inclusion in the national budget has been welcomed by residents of the affected districts, who see it as a sign that implementation will finally begin.
National pride project
The Dudhkoshi Reservoir Hydropower Project has been listed as a national pride project by the government.
A multi-party consultation meeting held to discuss compensation mechanisms concluded that land valuation should be determined in accordance with the Land Acquisition Act, 2034, taking into account prevailing market prices, valuations by banks and financial institutions, actual transaction values in the districts, and government rate schedules.
Land transactions on the Khotang side of the project area have been suspended since June 2021, while a land acquisition notice was issued for the Okhaldhunga section in February 2022.
Local representatives say compensation determination has been delayed because expectations of landowners differ significantly from provisions under existing land acquisition laws.
More than 1,000 families to be affected
Preliminary studies indicate that 162 households will be fully displaced by the project, while 988 households will be partially affected.
More than 1,050 families are expected to lose agricultural land to inundation once the reservoir is created.
The project envisions the construction of a 220-meter-high dam at Rabuwaghat. Water stored in the reservoir will be diverted through tunnels and released at Dhitung in Halesi Tuwachung Municipality-9 for power generation.
According to the Nepal Electricity Authority, the project is expected to generate approximately 3.44 billion units of electricity annually.
Beyond electricity production, the reservoir is also expected to create opportunities for boating, fish farming and tourism development in Khotang, Okhaldhunga and Solukhumbu districts.
Officials believe the reservoir could become a tourism attraction for visitors traveling to the sacred site of Halesi and to the Everest region, with boating services envisioned as an additional attraction once the project comes into operation.
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