The execution of the proposed 480-megawatt Phukot Karnali Hydropower Project, a joint venture between Vidhyut Utpadan Company Limited (VUCL) and India's NHPC Limited, has been at a standstill for a year.
The project halted following a writ petition filed at the Supreme Court challenging the government's decision to allow NHPC to build the hydropower facility. On January 5, 2024, the court ordered a temporary suspension of the agreement between VUCL and NHPC.
The collaboration was formalized during former Prime Minister Pushpa Kamal Dahal's visit to India in May 2023, where Nepal and India agreed to jointly develop the project.
VUCL CEO Bakhat Bahadur Shahi revealed that Rs 1.5 billion has already been spent on preparatory activities, including land acquisition, compensation distribution, construction of test tunnels, and road development. The project's total estimated cost is Rs 92 billion.
"The project is investment-ready, with most preparatory works completed. However, the court’s intervention has delayed construction, creating uncertainty about when it will resume," Shahi said. The project, initially scheduled for completion by 2033, may face delays of up to two years due to the suspension of preparatory works.
Shahi also noted that the Environmental Impact Assessment (EIA) report has been pending approval for a year, further delaying the project timeline.
Under the agreement, NHPC holds a 51% share in the joint venture, while VUCL retains 49%. The deal stipulates that Nepal will receive 21.9% of the generated electricity free of charge. However, NHPC later requested a reconsideration of this provision. Due to the ongoing writ petition, no discussions on this matter have taken place.
The petition, filed by Yashuda Kumari Baral and Ajay Bahadur Shahi of Raskot Municipality-8, Kalikot, demands the cancellation of the agreement, alleging that the central government allocated 51% of the project’s shares to NHPC without consulting local authorities.
The petition lists ten government entities, including the Government of Nepal, the Office of the Prime Minister, and various ministries, as defendants. Baral argued that the project could have been developed independently by Nepal, while Shahi defended the partnership with NHPC, stating it was essential to secure a market for the electricity produced.
The Supreme Court has delayed hearings on the writ, further prolonging uncertainty. A new hearing is scheduled for April 16, 2025. Discussions have reportedly taken place with the petitioners to withdraw the case, but Baral insists it will remain unless their demands are met.
“We demand guaranteed employment for Nepali technicians and workers, as well as free electricity for Nepal after the project’s completion. Without these assurances, we will not withdraw the petition,” Baral stated.
The government aims to generate 28,713 megawatts of electricity by 2035. However, Shahi cautioned that obstacles like those faced by the Phukot Karnali Hydropower Project could jeopardize these ambitions.
