The director of the company said that the ministry should have released the budget after the November 20 elections as the implementation of the code of conduct also expired. “It is not a matter that requires the cabinet approval,” the board member said.
Budhi Gandaki is a ready-to-go project as its detailed project report (DPR) has already been prepared. Compensation distribution to the residents of the project-affected areas for the acquired land has also reached close to completion, according to the officials of the company. The mega project which envisages ensuring energy security for Nepal for the next decades has been in limbo due to uncertainty over the modality of its development. The project will be Nepal's largest reservoir-type hydropower project and its development has been estimated at $2.6 billion. The project area is situated at the boundary between the districts of Gorkha and Dhading. For the government, generating resources and closing the project's budget gap will be a difficult undertaking. “As it is a ready-to-go project following the completion of DPR and almost complete compensation distribution process, the next challenge is to generate funds to develop this project,” the board member said. “Once the company comes into operation, our focus will be to complete the financial closure.” The government’s plan so far has been to develop this project with domestic resources based on the recommendation of a committee headed by former National Planning Commission Vice-chairperson Swarnim Wagle. The committee in a 2017 report had suggested that the government should develop the project on its own by providing viability gap funding, covering around one-third of the project development cost. As per the report, the government could cover the cost of land acquisition and resettlement of displaced families which could total as high as Rs 94 billion. According to the report, a significant chunk of resources can be generated from government institutions. An infrastructure tax being imposed on imported fuel could be an important source of revenue that can be used to develop the project. “Based on an average increase in petroleum consumption by 10 percent a year, as much as Rs164 billion can be collected from taxes imposed on fuel alone by the fiscal year 2026-27," reads the report. This estimated tax collection was calculated based on Rs 5 per liter infrastructure/carbon tax that the government has been imposing since 2015. In May 2015, the government decided to levy a Rs 5 tax per liter of petroleum products (barring cooking gas) on consumers to develop the Budhi Gandaki project with its own resources. From the fiscal year 2018-19, the government started charging taxes under the name of ‘infrastructure development tax.’ The tax was also raised to Rs 10 per liter of petroleum products. According to the report, the extra fund can also be generated from government-owned entities like Nepal Electricity Authority, Employees Provident Fund, Nepal Telecom, Rastriya Beema Sansthan, Hydroelectric Investment and Development Company, Upper Tamakoshi Hydropower Company, Chilime Hydropower Company, Nepal Army, Nepal Police, and the general public could be tapped for the project. The report also stated the resources could also be generated from international donor agencies or by the issuance of project-specific bonds and credits from the project’s suppliers. However, the company’s board member said that the government has not yet discussed with the donor agencies about potential funding from them. “This is the option that can be explored once the company comes into operation,” the board member said. Massive sums of money have already been spent by the government to compensate the residents of the project affected areas for the acquisition of their lands. According to the project's Environment, Compensation Distribution, Resettlement, and Rehabilitation Unit, it has already spent almost Rs 41 billion toward that end. For developing the project, an estimated 58,000 ropanis of land needs to be acquired. For this project, hardly any difficulty in acquiring land has been experienced. There is also broader political support for the development of this project. Prime Minister Puspa Kamal Dahal pledged to develop this project during his election campaigns in Gorkha before the general elections on November 20. Budhi Gandaki, which has been one of the country's most talked about projects for a long time, has been a victim of policy inconsistency despite facing hardly any problem in land acquisition and completing the DPR. In 2017, the Pushpa Kamal Dahal-led government awarded a contract to build the project without competitive bidding to China Gezhouba Group Corporation under the engineering, procurement, construction, and financing (EPCF) modality. The ruling was overturned by the Sher Bahadur Deuba-led administration in November 2017. A high-level group led by Wagle was then established by that administration, and it made the suggestion that the project could also be developed using domestic resources. Again, in September 2018, the then KP Sharma Oli administration decided in favor of the Chinese company, reversing the decision of the Deuba-led government. In April of last year, the Sher Bahadur Deuba administration once more chose to terminate the license granted to the Chinese company since it was not making any progress on the project. After construction work starts, the government anticipates finishing the project in eight years. “Even if we can develop it in 10 years, that will be a huge achievement,” the board member said, adding, “The project is vital for Nepal as it can generate enough electricity for domestic consumption in the winter.”
Comments