The parliamentary Agriculture and Water Resources Committee (AWRC) on Sunday directed the government to develop the 1,200 MW Budhi Gandaki Hydropower Project with domestic resources as adequate funding could be put together for its construction.

With the country in the grip of an unofficial Indian embargo that has created acute fuel shortages, the House committee asked the government to mobilize domestic resources instead of using the Indian line of credit to develop the project.

The government is undecided whether to use the Indian loan for the project after the Ministry of Physical Infrastructure and Transport asked for funding to build the Kathmandu-Tarai Fast Track Project. Initially, the government had planned to use half of the Rs1-billion Indian line of credit for the project.

Committee chairman Gagan Thapa said that the decision had been influenced by the national mood after the Indian embargo. “Most lawmakers were of the view that the project should be developed with domestic resources and and the country should not rely on foreign aid,” he said.

Thapa added that as there had been only talk about developing a storage-type project with Indian aid for a long time, and that no concrete decision had been made on using Indian financing, the committee had asked the government to use domestic resources.

“The embargo has also taught us the need for urgent development of a storage-type project to reduce high dependency on fossil fuels,” he added. Thapa had made a presentation at Sunday’s meeting showing that Rs250 billion could be collected from domestic sources. The presentation reveals that Rs210 billion can be put together from various sources like the government, Nepal Telecom, Citizen Investment Trust, institutional investors and the public.

While the government can invest Rs60 billion in five years, the rest of the required capital can be collected from other sources through their various schemes, according to the presentation. “If this method is applied, we need to borrow only Rs30 billion from commercial banks, public enterprises and others.”

Likewise, chairman of the Budhi Gandaki Hydropower Project Development Committee Laxmi Devkota said in his presentation that the project could be developed with local financing.

The government can invest Rs160 billion at the rate of Rs20 billion per year, and the rest can be generated through public share issuance, banks and financial institutions, remittance and non-resident Nepalis.

Meanwhile, Thapa said that the committee had also directed the government to be clear on how it would develop the project—through a development committee or another mechanism. The budget for the current fiscal year has stated that no additional projects would be developed under development committees.

“Officials from the Energy and Finance ministries were of the view that developing energy projects under development committees has been a failure,” said Thapa.