Budhigandaki project unable to meet recurrent expenses

The government has allocated Rs 1bn to Budhigandaki Jalbidhyut Company Ltd (BJCL). Of this amount, the project has received Rs 400m so far. However, the company has been unable to pay its employees’ salaries for the past year.

The company was incorporated in mid-Aug 2022 and started operations in mid-July 2023. Since it has only been authorized to make capital expenditures, it hasn’t been able to cover its recurrent expenses. Jagat Shrestha, the CEO of BJCL, explained that the company hasn’t been able to pay salaries because it hasn’t been allocated a recurrent budget for the current fiscal year. “Since there is no budget heading for salaries, we cannot transfer funds from other headings to pay our employees,” he added.

Before BJCL was incorporated, all activities related to the hydropower project were managed by a project office under the Ministry of Energy, Water Resources, and Irrigation. Following the construction of the 456-MW Upper Tamakoshi Hydropower Project with domestic investment, the government decided to implement the Budhigandaki project using domestic resources. Consequently, BJCL was established. After the project unit was dissolved, the operational expenditure heading in the budget was inadvertently omitted, Shrestha noted. He assured that the employees’ pending salaries and other administrative liabilities for the current fiscal year would be settled after reconciling the financial accounts in the upcoming fiscal year.

The 1,200 MW Budhi Gandaki project is located in the Gorkha and Dhading districts. The land acquisition and compensation process for areas affected by the project is currently ongoing. This fiscal year, the plan includes distributing compensation to people whose names are missing from the official land acquisition records. According to Shrestha, Rs 100m is needed for this purpose. Additionally, Rs 60m is required for people who have land plots in the field book but lack a land registration certificate.

The project was first identified 45 years ago when Snowy Mountain Engineering recommended a 300 MW project. The feasibility study was conducted in the mid-1980s.

During the tenure of Prime Minister Dr Baburam Bhattarai (Aug 2011 to March 2013), the government adopted a policy to build a reservoir project in each of the five development regions. Due to its proximity to Kathmandu, the government initiated the development of a reservoir-based hydropower project on the Budhigandaki River.

Tractebel Engineering of France prepared a detailed project report (DPR) about a decade ago. The DPR proposed constructing a 263-meter dam two kilometers upstream of the confluence of the Trishuli and Budhigandaki Rivers. The dam will create a 63 sq km reservoir covering 9,630 hectares.

The reservoir will submerge 2,566 hectares of cultivable land, 2,403 hectares of forest areas, and 1,300 hectares of rivers, cliffs, and religious sites. The project will displace a total of 8,117 families. The government has already spent Rs 43 billion on the project. The government has achieved 95 percent progress in distributing compensation to the affected families.