Cost of Tamakoshi-5 Hydropower Project Rises

The cost of the Tamakoshi-5 Hydropower Project being developed by Tamakoshi Jal Vidyut Company Limited has increased significantly, heightening the project’s financial risk, according to a report by credit rating agency ICRA Nepal.

The company, a subsidiary of the Nepal Electricity Authority (NEA), is constructing the 99.8-megawatt project in Dolakha district. The project’s estimated cost has increased by around 16 percent to approximately Rs 246 million per megawatt, up from the initial estimate of Rs 212 million per megawatt, the report states. The company plans to finance the project under a 65:35 debt-equity structure.

ICRA Nepal noted that the project remains at an early stage and that several major contracts have yet to be finalized, posing risks of further cost escalation and time overruns.

According to the report, loan arrangements have so far been secured only on the basis of the original cost estimate, while only about 41 percent of the total required equity had been invested by mid-January 2026. Although the Nepal Electricity Authority has proposed investing the remaining equity through energy bonds, uncertainty over their timely implementation has added to the project’s financial risk.

The report also pointed out that about 53 percent of the project cost will be incurred through contracts denominated in US dollars, exposing the project to foreign exchange fluctuation risk. In addition, the project’s high debt component could increase interest expenses during the construction period if interest rates rise. ICRA Nepal warned that these risks could intensify further if project completion is delayed and described them as key sensitivities affecting the company’s credit rating.

Established on March 3, 2017, Tamakoshi Jal Vidyut Company Limited is developing the Tamakoshi-5 project with plans to finance around 65 percent of the investment through debt.

Under the proposed equity structure, the Nepal Electricity Authority will hold around 68 percent ownership, while the remaining 32 percent shares are planned to be raised from the general public through an initial public offering (IPO).

According to the rating report, the project’s financial progress had reached around 13 percent by mid-November 2025, while the commercial operation date has been set for July 4, 2028.

Initial cost estimate of Tamakoshi-5 Hydropower Project posted on the official website of Tamakoshi Jal Vidyut Company Limited