Upper Trishuli-1, one of the largest FDI projects, achieves 22% physical progress

Considered one of the largest FDI projects in Nepal to date, the Upper Trishuli-1 hydroelectric project has reportedly achieved 22% physical progress since its commencement in January 2022. The project recently completed the construction of a 420 metres long diversion tunnel and works are now underway on the construction of the head works.

Located in the Rasuwa district of Bagmati Province, about 75 kilometres northwest of Kathmandu, Upper Trishuli-1 has an installed capacity of 216 megawatts. The expected date of completion is December 2026.

The estimated project cost of Upper Trishuli-1 stands at $647.3 million. 

70% of the project costs i.e., $453.2 million is financed by a consortium of nine different international banks which include the International Finance Corporation (IFC), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Export-Import Bank of Korea (K-EXIM), Korea Development Bank (KDB), Commonwealth Development Corporation (CDC), FMO (a Netherlands’ development bank), Proparco (a French finance development institution), and OPEC Fund for International Development (OFID).

The remaining 30% of the cost is financed through a special purpose vehicle — Nepal Water & Energy Development Company (NWEDC) with equity-sharing among a Korean consortium — consisting of Korea South East Power (KOEN), Daelim, Kyeryong; the IFC and a local partner.

Upon completion, the entire production from the project will be bought by the Nepal Electricity Authority (NEA) under a 30-year Power Purchase Agreement (PPA) with the NWEDC that was reached in January 2018. The rate per unit has been set at Rs 4.80 during the wet season (June-November) and at Rs 8.40 during the dry season (December-May).

According to the PPA, the NEA will pay the NWEDC in US dollars for a period of 10 years or until the foreign debt has been repaid, following the exchange rate prevailing on the day the agreement was signed.