KATHMANDU: The estimated cost of the 1,200 MW Budhigandaki reservoir-based hydropower project has been revised to USD 2.77 billion (approximately Rs 332 billion), prompting Energy and Water Resources Minister Kulman Ghising to direct immediate finalization of its investment modality.

On Wednesday, Minister Ghising met with officials from the Ministry and Budhigandaki Company Limited, emphasizing that the project, expected to generate 3.38 billion units of electricity annually, should not remain stalled.

He urged the company management to determine and present a feasible investment plan through financial analysis.

Ghising suggested that the project could become viable if exemptions are provided on land acquisition, forest compensation, customs duties, and taxes, and proposed that half of the petroleum infrastructure tax be directly allocated to the project.

Funding could also be raised through Nepal Electricity Authority shares. He instructed a 50% equity–50% debt investment model to avoid placing a burden on the government.

Two investment modalities have been prepared by the company: one assuming government Viable Project Funding (VPF) at 30:70 equity-debt, and one without VPF at 25:75, including concessional loans for land, infrastructure, and environmental costs.

Equity is expected from the government, NEA, Employees Provident Fund, Citizens Investment Trust, Nepal Telecom, and the public.

Land acquisition, the most complex aspect of the project, is about 90% complete, with Rs 42 billion already paid in compensation.

The project will affect 8,117 households in Gorkha and Dhading districts, including 3,560 fully displaced families.