Karnali province in western Nepal comes last in electricity generation among the seven states despite its potential of 18,000 MW as per government statistics. However, that status will change drastically once the projects that have been planned to be built here roar into life. 

According to the Department of Electricity Development, 55 companies are in various stages of receiving licences to construct hydroelectric projects in Karnali. Currently, the 3.75 MW Dwarikhola Hydroelectricity Project in Dailekh district is the only plant that is producing energy.

The 55 hydropower projects awaiting permits have a combined installed capacity of 9,359 MW. Among them, 21 have obtained survey licences while four are in line to receive them. One is in operation, eight have applied for survey licences and 21 projects have been put in ‘reserve’ by the government.

Nine hydroelectric projects are being constructed in Karnali under the National Energy Crisis Reduction and Electricity Development Decade. These prioritised projects are Upper Karnali (900 MW), Phukot Karnali (426 MW), Betan Karnali (688 MW), Tila-1 (300 MW), Tila-2 (297 MW), Nalagaad (410 MW), Jagadulla (307 MW), Bheri-1 (617 MW) and Bheri-4 (300 MW).

Gokarna Raj Pantha, senior division engineer at the Ministry of Energy, Water Resources and Irrigation, said, “If Karnali can complete these projects within a decade, it will become the richest province in the country.”

The nine projects, all slated for completion within eight years, have a combined installed capacity of 4,245 MW. The provincial government will receive 50 percent royalty from these projects, which is estimated to total Rs3.8 billion annually. The Upper Karnali project will be paying the highest amount of royalty of Rs2.32 billion. 

Stakeholders claim that after the completion of the planned hydroelectric projects, Karnali’s image as a ‘poor province’ will be changed as electricity generation, road expansion, employment and improvement in economic and social status of the people will follow. Former chairman of the Independent Power Producers Association of Nepal (IPPAN) Khadak Bahadur Bista said that policy-level intervention was necessary for hydroelectric development. He said, “The tedious administrative process involving seven ministries, 23 departments and 36 clauses of 18 acts needs to be slashed. Restrictions related to Environment Impact Assessment (EIA) and cutting trees should be eased.”

Chief Minister of Karnali Mahendra Bahadur Shahi said, “The provincial government is willing to waive taxes for several years as a matter of investment security and guarantee of profits. He added, “Without developing large hydroelectric projects, Karnali province cannot become prosperous.” 

The Upper Karnali Hydroelectricity Project is one of the prioritised projects in Karnali province. The project will be spread over Dailekh and Surkhet in Karnali and Achham district in Province 7. The project is being constructed by GMR, an Indian company. The dam will be constructed in Dailekh. The powerhouse will be located at Balde in Achham and water will be brought to it from the reservoir at Daab in Dailekh through a 2.5-km tunnel.

The government will receive 12 percent of the electricity generated by the plant and 18 percent of the shares in the project for free. Survey details of a 400 kV double circuit transmission line to be constructed up to Bareli to export power to India are already complete. The transmission line in Nepal that will pass through Surkhet, Achham and Kailali districts will be about 400 km long. GMR and the government of Nepal conducted a Project Development Agreement (PDA) in September 2014. All the land required for the project has been acquired. As the Power Purchase Agreement (PPA) got delayed, the project was under pressure to generate the necessary funding in the last one year. GMR is said to be in the final stage of signing the PPA. Delays in the PPA have affected securing financial sources for the project. Investment Board Nepal (IBN), a governmental agency responsible for implementing hydroelectric projects, extended the deadline for financial closure to September 2019 due to repeated delays by GMR. The company has signed a memorandum of understanding with Power Trading Corporation (PTC), India to sell 500 MW electricity to Bangladesh. 

Co-secretary of IBN Madhu Bhetwal said, “The memorandum has already been signed. Work related to a ‘term sheet’ between GMR and Bangladesh Power development is in the final stage.” Nepal will receive 108 MW for free while the remaining 300 MW will be purchased by the government of the Indian state of Haryana.

Another large hydroelectric project planned in Karnali, the 410 MW Nalagaad Hydroelectric Project, is a reservoir-type plant. The project has completed land acquisition. International advisors have been selected for various studies related to the project. Work related to the design and the construction of a road from the dam site to the powerhouse is underway. The Nalagaad project was estimated to cost Rs64.15 billion in 2012. The project will affect 588 families. 

Likewise, the Bheri-4 Hydroelectricity Project will be built under the Boot model by Bheri Energy Company. The project received a survey licence about a year ago. This will be the first large reservoir-type hydroelectric project to be constructed by the private sector. Currently, hydrology and sediment studies are underway. Energy producers say that the Bheri basin is most appropriate for the construction of reservoir-type projects.