Finding USD 3B

1. Early Identification and Initial Feasibility (1966–1985)

The conceptual origins of the Budhi Gandaki Hydroelectric Project trace back to 1966, when Dr. Hari Man Shrestha first identified the project during his Ph.D. research at the Moscow Power Institute, estimating Nepal’s theoretical hydropower potential at 83,000 MW. Two years later, in August 1968, he presented his findings at the VII World Power Conference in Moscow, marking the earliest documented reference to the Budhi Gandaki scheme.

In the 1970s, the project gained institutional recognition through the Gandaki Basin Study and the Master Plan of Hydroelectric Power Development in Nepal (1974, prepared by JICA). By 1978, the Snowy Mountains Engineering Corporation (SMEC) submitted a report to His Majesty’s Government of Nepal (HMG/N), screening potential sites within the Gandaki Basin—identifying Burhi Gandaki as one of the most promising.

SMEC’s 1979 Gandaki River Basin Power Study recommended constructing a 225-meter earth and rockfill dam with an installed capacity of 500 MW. Subsequently, in 1982, HMG/N’s Electricity Department launched prefeasibility studies for selected sites, officially initiating the Burhi Gandaki Prefeasibility Study on November 26, 1982.

The 1984 Prefeasibility Study Report (Vol. I) recommended a 225 m high rockfill dam with clay core, a 600 MW capacity, and a Full Supply Level (FSL) of 520 m. This report effectively established the project’s modern technical parameters. A year later, in 1985, the Arughat Small Hydropower Project was established to supply Arughat Bazar, representing the first localized power initiative in the region.

2. International Engagement and Project Shelving (1990–2011)

The project re-emerged in 1990, when India expressed interest following Nepal’s political transition. During Prime Minister Chandra Shekhar’s visit, discussions began on potential bilateral cooperation. In April 1991, the Second Meeting of the Indo-Nepal Sub-Commission on Multiple Uses of Water Resources formally discussed the project. Later that year (December 1991), Nepal’s Prime Minister G. P. Koirala and Indian counterparts agreed to complete field surveys by June 1992 and prepare a Detailed Project Report (DPR) to enable construction by 1994.

However, during the joint expert meeting (Feb 24–27, 1992), disagreements arose over the modality of DPR preparation—India’s proposal to lead the DPR from its own government office on a turn-key basis was unacceptable to Nepal. Consequently, the project was shelved.

Despite several revival intentions in 1996, 2004, and 2007, none materialized. The project resurfaced only after the 2010/11 energy crisis, when the Nepal Electricity Authority (NEA) reinitiated studies due to the project’s strategic proximity to Kathmandu. In mid-2011, the 10-Year Hydroelectric Project Development Planning Task Force projected pre-construction by 2013, construction by 2014, and completion by 2018. NEA also reviewed the prefeasibility study and proposed an alternative layout (Option 3: Powerhouse in Phisling).

3. Tractebel Feasibility and Detailed Design (2012–2015)

A major breakthrough occurred in December 2012, when NEA awarded the Feasibility Study, Detailed Design, and Tender Document contract to Tractebel Engineering SA (France) in association with JADE Consult Pvt. Ltd. (Nepal). Work formally commenced on February 1, 2013, with a 30-month schedule.

Between 2013 and 2014, extensive field reconnaissance, environmental and socioeconomic surveys, and public consultations were conducted. The Public Consultation and Disclosure Plan (PCDP) was first submitted in February 2014, and by March 21, 2014, the Budhigandaki Hydroelectric Project Development Committee (BGHPDC) approved Option 1 (Powerhouse at Dam Toe) as the final design layout.

Key submissions followed:

• Phase 1 Design Concept Report (March 2014)
• Draft Final Feasibility Report (Nov 1, 2014)
• Final Feasibility Report (Feb 1, 2015)

The Government of Nepal approved the ToR and Scoping Documents in April 2015. Although the April 25, 2015 earthquake delayed progress, subsequent activities included census surveys (Dhading and Gorkha), data analysis, hydraulic model visits, and restructuring of tender documents into three lots (Preparatory Works, Dam Structures, Power Plant & Waterways).

By November 2015, Tractebel completed the Detailed Project Report (DPR), Environmental and Social Impact Assessment (ESIA), and Final Field Investigation Report. Around 2015–2016, the government introduced a Petroleum Infrastructure Tax (Rs 5 per liter) to mobilize domestic capital for the project, setting a 2016 target for construction initiation.

4. Contractual and Political Turmoil (2017–Present)

The project entered a turbulent phase marked by political shifts and contractual reversals. In May 2017, the Dahal (Maoist) government awarded the project to China Gezhouba Group Corporation (CGGC) under a no-bid Engineering, Procurement, Construction and Financing (EPCF) model. A Memorandum of Understanding (MoU) followed on June 4, 2017.

However, in November 2017, the Deuba (Congress) government scrapped the CGGC deal, citing procedural irregularities—marking the first policy reversal. In September 2018, the Oli (UML) government re-awarded the project to CGGC, only for the Deuba government in April 2022 to cancel the agreement again, this time definitively—leading to the project’s pivot toward a domestic model.

During this phase, progress shifted toward institutional consolidation. The Budhigandaki Hydropower Company Limited (BJCL) was established in 2022–2023 to implement the project domestically. Subsequent milestones include:

• Notices on compensation distribution in Dhading (June 2021)
• BJCL Annual Report 2079/80 (2022)
• Publication of BJCL’s Articles of Association and Regulations (Sept 3, 2024)
• Recruitment notices, interviews, and CEO selection process (2024–2025)
  
  

In November 2025, Minister Kulman Ghising urged the finalization of the investment modality, emphasizing a state-led model with 50% equity and 50% debt, signaling a potential resolution of the long-standing financial impasse. The construction start remains targeted for 2025.

Chronological Summary