Former Prime Minister Pushpa Kamal Dahal inaugurated the field office of the 1,200-megawatt capacity Budhigandaki Hydropower Project in July 2023. However, nearly a year and a half later, the progress of the project remains uncertain.

The Budhigandaki Hydropower Company was established three and a half years ago with the aim of developing this project, which is considered a matter of national pride. Yet, the company's capital structure is still not clear. Although the government announced that the project would be led by the Nepal Electricity Authority, the role of the authority has not been clearly defined. The government prepared a proposal for investment a year ago but has been unable to finalize it, leaving the project's construction in limbo. The detailed project report (DPR) for Budhigandaki is ready, and the government has collected more than Rs 10 billion in taxes on petroleum products.

The government had discussions with potential investors for the project, proposing three investment structures. Even after the cabinet approved the investment structure, no progress has been made, according to officials. The project's chief executive, Chiranjivi Chataut, told New Business Age that further discussions on the proposed structures have caused delays. "We are still in policy discussions on the financial modality. It has been almost a year since the proposal for the modality was made, but it is still not clear which modality will be adopted," Chataut said.

Last year in January, the Ministry of Energy proposed three modalities (investment structures). The first option recommended advancing the project with an 80:20 debt-to-equity ratio. According to this modality, the total investment for the project's construction period, including interest from the bank, is estimated at Rs 306.16 billion. The government would need to invest Rs 187 billion in total, including Rs 155.38 billion in concessional loans and Rs 88.78 billion in commercial loans. The proposed equity of Rs 62 billion would be split, with the government holding 51%, the Nepal Electricity Authority 20%, and the remaining 9% held by the Employee Provident Fund, the Citizen Investment Trust, Nepal Telecom, and other public bodies.

The second option proposed an estimated investment of Rs 303.77 billion with a debt-to-equity ratio of 75:25. Under this option, the government would invest Rs 187 billion, including Rs 148.24 billion in concessional loans and Rs 38.36 billion in equity. Additionally, commercial loans of Rs 79.53 billion would be required.

The third financial modality suggested an estimated cost of Rs 301.22 billion with a 70:30 debt-to-equity ratio. In this scenario, the proposed government contribution of Rs 187 billion would include Rs 140.59 billion in concessional loans and Rs 46.51 billion in equity.

Although most of the preliminary work for the project's approval, such as the environmental impact assessment (EIA) study, has been completed, the project's construction phase has not begun due to the stalled investment modality. The company had set a target to start the project's construction this year, but Chataut said that the construction is still uncertain. The goal is to bring the project into operation within eight years of starting construction.