The Nepalese government has awarded a state-owned power company to build the $2.5bn Budhi Gangaki hydroelectric power plant.

The plant was initially set to be developed by China Gezhouba Group Corp, however the government has now excluded that firm, citing lapses in the awards process.
Nepal hydropower plant
The country’s opposition Communist UML party has vowed to hand the project back to China, should it win re-election in general elections next week.

“The cabinet has decided to entrust the Nepal Electricity Authority (NEA) to develop the plant,” Pushkar Dhungel, an aide to Deputy Prime Minister Kamal Thapa who is also the energy minister, told Reuters.

The government has also set up a panel to arrange for funds for the project, the energy ministry said in a notice, adding that the plant was expected to be ready in eight years.

Nepal’s giant neighbours China and India both vie for influence in the country and have been lobbying for infrastructure projects there.

Soon after the China Gezhouba deal was scrapped, India’s state-run power company NHPC Ltd expressed its interest in bidding for the project to build the 1,200 MW plant.

Nepal’s rivers, cascading from the snow-capped Himalayas, have vast, untapped potential for hydropower generation, but a lack of funds and technology has made it lean on India to meet annual demand of 1,400 MW.