The government is planning to complete the compensation distribution for those affected by the construction of the 1,200MW Budhi Gandaki Hydropower Project in the next fiscal year, but development modalities still remain uncertain.

The Ministry of Energy has asked the Finance Ministry to allocate Rs18 billion of the next budget for compensation payments for people affected by the $2.5 billion Budhigandaki Hydropower project in the next fiscal year. The storage-type project is located in Gorkha and Dhading districts.

The budget ceiling for the Energy Ministry set by the National Planning Commission for the next fiscal year is Rs88.45 billion. “Out of this, Rs18 billion will be set aside for land compensation payouts,” said Gokarna Raj Panta, deputy spokesperson at the Energy Ministry.

The government has already spent around Rs20 billion to acquire land from 27 settlements in Gorkha and Dhading districts.

“The land acquisition process and distribution of compensation is in line with the government’s plan and policy for the next fiscal year in order to build the project,” said Prabin Raj Aryal, spokesperson of the Energy Ministry. “We are yet to fix the land rates in a few market areas in Gorkha and Dhading.”

The authorities have fixed the compensation rates for around 30,000 ropani of land in Gorkha and 28,000 ropani in Dhading.

But the Energy Ministry is yet to settle the compensation issues in Arughat and Arkhet in Gorkha and Khahare in Dhading as these areas will face a complete inundation.

The government has estimated that around Rs60 billion will be required to complete the land acquisition in project-affected areas.

The government, through the Nepal Oil Corporation, has so far collected Rs30 billion as an infrastructure tax from the public.

The government has accorded top priority for the development of the project but it has remained in a state of uncertainty.

In September last year, the Cabinet had directed the energy ministry to initiate processes to prepare a proposal, hold talks and strike a deal with Chinese contractor Gezhouba Group Corporation for execution of the national pride project. But the plan fell apart.

In a recent interview with the Post, Energy Minister Barsha Man Pun confirmed that after two rounds of negotiations with the Chinese contractor, there were no further developments.

The government had recently amended the foreign investment law and introduced provisions allowing investors to apply for the project’s development if they are ready to construct the project under engineering, procurement, construction and financing (EPCF) model.

The Energy Ministry had then sought comments from the Finance Ministry to allow project development under the EPCF modality. But the Finance Ministry raised concerns over the modality and overall cost of the project, said an official at the Energy Ministry.

Besides, a guideline for execution of projects under the new modality is also not ready yet, he said.

The project landed in controversy after the then Prime Minister Pushpa Kamal Dahal led-government awarded a contract to the Chinese firm under EPCF model without competitive bidding.

The decision to award the contract to the Chinese developer was quashed by the Deuba-led government in November 2017, saying that there were some procedural flaws while awarding the contract.

And now, the Finance Ministry has also advised Energy Ministry to go for a competitive bidding by reducing the cost of the project.