The state-owned Vidhyut Utpadan Company Limited (VUCL) has terminated the investment partnership process for two significant hydropower projects—the 1,902 MW Mugu Karnali and the 454 MW Kimathanka Arun.
The company announced the decision through a notice in a national daily on Friday, January 17. It states that the 178th meeting of VUCL's Board of Directors, held the previous day, resolved to cancel the process.
Although the notice did not explicitly detail the reasons for cancellation, the decision came amid widespread criticism that the process was rushed and allegedly manipulated to benefit specific individuals and companies. Concerns were heightened after VUCL drafted working procedures that allowed the process to proceed even if only a single proposal was received.
Notaly, the only proposal for the reservoir-based Mugu Karnali Hydropower Project, was from CG Energo Pvt. Ltd., a subsidiary of the Chaudhary Group, owned by Nepali Congress MP and billionaire industrialist Binod Chaudhary. This further fueled allegations of favoritism.
Prime Minister KP Sharma Oli reportedly expressed dissatisfaction with the process, while Energy Minister Deepak Khadka, also from the Congress Party, faced scrutiny during a party meeting on Thursday over his role in the matter.
VUCL had initially invited proposals on December 8, 2024, from Nepali citizens or companies promoted by Nepali citizens to acquire 51% ownership of the projects under a public-private partnership model. The original 15-day deadline was later extended by an additional 15 days.
Nabin Poudel, VUCL's information officer, previously told New Business Age that domestic investment was prioritized after resistance from locals against earlier projects carried out in partnership with foreign companies.
For the semi-reservoir-based Kimathanka Arun Hydropower Project, five companies–Bela Nepal Industries Pvt. Ltd, Vision Energy and Power Ltd., NJ Hydro Energy Pvt. Ltd., Noble Group of Hydro Energy Pvt. Ltd. and Anak Hydropower Company Pvt. Ltd.–submitted applications.
The final deadline for proposals passed on Tuesday, January 7, after which they were opened for evaluation.
The Mugu Karnali project, currently in the feasibility study phase, is projected to cost Rs 460 billion and is expected to generate 6,291.8 gigawatt-hours of electricity annually. Considered a potential game-changer for Nepal’s energy sector, the project is planned along the uppermost belt of the Karnali River, spanning five districts: Kalikot, Bajura, Mugu, Humla, and Jumla. The proposed dam will stand approximately 283 meters above the river surface.
Meanwhile, the Kimathanka Arun Hydroelectric Project is estimated to cost Rs 93.8 billion.
