The government in the last fiscal year decided to build the reservoir-type project on its own and established Budhi Gandaki Jalbidhyut Public Limited for the development of the 12,00MW project. However, the company is yet to come into operation as the government has not provided the budget to get approval for commencement from the Office of the Company Registrar (OCR).
As of now, the authorized capital of Budhi Gandaki company is Rs 20 billion. The Energy Ministry has a 50 percent stake in the company while the Finance Ministry and NEA have 30 percent and 20 percent stakes, respectively. According to NEA, it has the technical expertise on developing big projects but it wants a majority stake in the newly established company. The share structure of the company will be restructured based on the report of the Thike-led task force. As developing storage-type projects is quite expensive compared to the run of the river-type projects, a viability gap funding is likely to be required from the government to develop this project, according to NEA. Budhi Gandaki is a ready-to-go project as its detailed project report (DPR) has already been prepared. Compensation distribution for the land acquisition and houses has also been in the final stage, according to Energy Ministry officials. The project which has been touted as important to ensuring Nepal's energy security as it is expected to help the country to be self-reliant even during the dry season has been in limbo for a long due to uncertainty over the modality of its development. Earlier, Budhigandaki fell victim to policy inconsistency despite facing hardly any problem in land acquisition and completion of DPR. In 2017, the then government led by Pushpa Kamal Dahal 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 Sher Bahadur Deuba-led administration in November 2017 overturned the earlier government’s decision. A high-level team led by Swarnim Wagle, former Vice-chair of the National Planning Commission, was then established. The committee suggested that the project could also be developed using domestic resources. Again, in September 2018, the government led by KP Sharma Oli decided in favor of the Chinese company, reversing the decision of the Deuba-led government. In April of last year, the Sher Bahadur Deuba-led government once more decided to terminate the license granted to the Chinese company since it was not making any progress on the project. Budhi Gandaki, which will be Nepal's second and the largest reservoir-type hydel project with an estimated cost of USD 2.6 billion, is situated at the boundary between the districts of Gorkha and Dhading. The report prepared by the committee headed by Wagle in 2017 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 its report, the government could cover the cost of land acquisition and resettlement of displaced families which could total as high as Rs 94 billion. 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. According to the Wagle report, public enterprises such as Nepal Electricity Authority, Employees Provident Fund, Nepal Telecom, Rastriya Beema Sansthan, Hydroelectric Investment and Development Company, Upper Tamakoshi Hydropower Company, Chilime Hydropower Company, along with Nepal Army, Nepal Police, and the general public could be tapped for the project.
