Before the cabinet decision, a high-level committee led by the then Vice Chairman of the National Planning Commission, Bishwa Poudel had recommended the deadline extension for the project.
However, advocate Bhandari challenged the government's decision and filed a writ at the Supreme Court. The apex court in the first week of November 2022 stayed the government’s decision to extend the deadline for GMR Energy to complete the financial closure of the 900MW Upper Karnali Project, throwing the future of the project into uncertainty. A single bench of Justice Ishwar Prasad Khatiwada issued the interim order not to implement the government decision until the final verdict. Then, the government moved the court in mid-November seeking to vacate its November 3 interim order, arguing that GMR won’t be able to work towards financial closure. Responding to the government petition, justices Kumar Regmi and Til Prasad Shrestha on January 3, 2023, sent the dispute of Upper Karnali to the constitutional bench citing concerns of constitutional interpretation. With the constitutional bench finally scrapping the writ, GMR now can move ahead with the completion of the PPA and financial close for the project. The Supreme Court Spokesperson Bimal Poudel said that Sunday's decision has cleared the way for the developer (GMR) to proceed with the project development. "The full text of the verdict will be published soon," he said. The Investment Board Nepal (IBN) and GMR Energy signed the PDA on September 19, 2014. As per the PDA, the Indian company was supposed to complete the financial close within two years. But the deadline was extended further on January 8, 2017, by a year. On November 10, 2017, the Investment Board again extended the deadline by an additional year. Despite repeated deadline extensions, the Indian company has been struggling to conclude the financial closure of the project though some progress has been achieved in the purchase of power generated from the Upper Karnali Project. It is said that GMR's inability to move ahead with the project development is related to the contractor's high debt level and insolvency which has affected the company's power projects in India and elsewhere. In April 2017, Bangladesh signed a memorandum of understanding with India’s NTPC Vidyut Vyapar Nigam Limited (NVVN) to import electricity from the Upper Karnali HEP. Bangladesh has also issued a letter of intent to GMR expressing its interest to enter into a contract to purchase 500 MW of electricity from the Upper Karnali Project. During the meeting of the Joint Working Group and Joint Steering Committee on the energy between Nepal and Bangladesh in late August, it was notified that the Bangladesh Power Development Board, NVVN, and GMR were preparing to sign a trilateral power sales agreement. Following the scrapping of the writ, it is said that GMR officials will visit Nepal this week.
