NHPC India Limited is all set to get one more hydropower project development contract in Nepal. The government is preparing to bring the Indian firm as a co-investor to develop the Phukot Karnali Hydropower Project. Nepali officials have agreed to make NHPC, an Indian government entity, a co-developer of the 480 MW semi-reservoir project. Sources at the Energy Ministry said an understanding was reached between Nepal and India to this effect during the Energy Secretary-level JSC meeting that concluded on Saturday. A member of the Nepali team present in the meeting also confirmed the two sides agreed to make NHPC a partner in the Phukot Karnali project. The agreement, however, was not mentioned in the official press statement.

"A draft MoU was prepared during the meeting," said the Nepali team member. "Once it is approved by the Cabinet, a formal MoU will be signed."

The Phukot Karnali Hydropower Project is located in Sannitriveni Rural Municipality of Kalikot district. The government-owned Vidhyut Utpadan Company Limited (VUCL) is developing the project. As per the understanding reached with India, now, VUCL and NHPC will jointly develop the project. Once the formal agreement is signed, the construction of the project will start by establishing a joint venture company between VUCL and NHPC. Energy Ministry sources said NHPC will have a 51 percent stake in the joint venture. It has been proposed that Nepal will get 21.9 percent free electricity from the project. NHPC will have to arrange loan investments and guarantee the market for electricity generated from the project. VUCL had received the license to construct the Phukot Karnali Project in 2017. The company has already started the project works including land acquisition. The company was looking for a foreign investment partner to take the project ahead. Phukot Karnali will be NHPC’s third hydropower project in Nepal. Last year, the company had signed an MoU with Investment Board Nepal (IBN) to develop the 750 MW West Seti Project and 450 MW SR-6 Project. The Indian company has already received a survey license for the West Seti while it has applied for the same for SR-6. According to IBN, NHPC has recently submitted the preliminary report of the West Seti Project. NHPC is set to submit a detailed project report (DPR) of the project within 21 months.