Financial Management for 900 MW Upper Karnali Hydropower Project Secured
January 17, 2025 | Investopaper
The Upper Karnali Hydropower Project, with a capacity of 900 megawatts, will be developed by GMR Group. After ten years since signing the project development agreement, GMR has secured financial management, allowing it to enter the construction phase.
The Supreme Court mandated that GMR finalize financial arrangements by Magh 4, 2082 BS. On Magh 3, 2081 BS, GMR submitted its financial management report to Nepal’s Investment Board, confirming its commitment to the project.
GMR applied for the Upper Karnali project in 2063 BS and was awarded the contract in 2065 BS . The company chose this project over Arun-3 during the bidding process. A project development agreement signed in 2071 BS required financial management to be completed within two years and construction within seven years.
However, delays led to multiple extensions for financial management from 2073 to 2079 BS. On Ashad 31, 2079 BS, the government extended the deadline for financial management by two years, prompting a legal challenge. The Supreme Court intervened in Karthik 2079 BS with an interim order against further extensions and reaffirmed this stance in Baisakh, 2080 BS.
Consequently, the Cabinet decided on Shrawan 10, 2080 BS, that GMR must complete financial management within the specified timeframe.GMR has partnered with Indian public sector companies SJVN and IREDA for this project.
SJVN holds a 34 percent stake in Upper Karnali alongside GMR’s 34 percent, while the Nepal Electricity Authority has a 27 percent stake. The project is expected to generate significant revenue for Nepal over 25 years and is regarded as one of the most cost-effective hydropower projects globally. However, costs have escalated to approximately Rs. 164 billion due to construction delays.
