Upper Tamor Becomes Nepal’s First Hydropower Project to Use TBM for Tunnel Construction

Kathmandu: The 285 MW Upper Tamor Hydropower Project, promoted by Tamor Energy Ltd. (TEL), is set to become Nepal’s first hydropower project to use Tunnel Boring Machine (TBM) technology for the construction of its 8.7 km headrace tunnel.

On Thursday (April 3), TEL signed an agreement with China Railway No. 2 Engineering Group Co. Ltd. for the implementation of this cutting-edge tunneling method. The agreement was signed by TEL Chairman Pushpa Jyoti Dhungana, General Managers Prakriti Raj Timilsina and Padam Prasad Pokharel, and on behalf of China Railway, Nepal Head Luo Xiaorong, Manager Ujwal Poudel, and Project Chief Zeng Bo.

Speaking at the signing ceremony, Minister for Energy, Water Resources, and Irrigation, Deepak Khadka, highlighted the importance of strengthening bilateral cooperation through knowledge and technology sharing. “Nepal must continue to build its capabilities while maintaining balanced diplomatic relations with our large neighbors to the North and South,” he said. “I hope that the Upper Tamor project will be completed on time, underpinned by this strong partnership.”

The minister emphasized the government's commitment to creating investor-friendly policies and driving national prosperity by encouraging private sector involvement. “The country's prosperity is possible only through strong collaboration with the private sector,” he added.

Minister Khadka also noted that Upper Tamor will significantly contribute to the Government of Nepal’s target of generating 28,500 MW of electricity by 2035. “Hydropower development will uplift the lives of all citizens, not just a few,” he stated. “The government is working with a clear and strategic vision.”

Former Minister for Culture, Tourism, and Civil Aviation, Yogesh Bhattarai, also addressed the gathering. He said the adoption of TBM technology marks a new era in Nepal’s infrastructure development. “The implementation of this project will not only drive economic growth in Taplejung but also have a far-reaching impact on Nepal’s national economy,” he said. “It reflects our country's steady move toward prosperity.”

TEL Chairman Dhungana shared that the private sector’s confidence in hydropower development has increased over time. “We started with small projects, and through those experiences, we’ve reached this point,” he said. “If favorable conditions persist, we are confident that this project can be completed within four years.”

He further informed that NPR 24 billion has already been secured out of the estimated NPR 51 billion required for the project. Of the total investment, NPR 12 billion will come from stakeholder equity, and NPR 8 billion will be raised through an Initial Public Offering (IPO). The financial closure for the project has already been completed.

China Railway’s Nepal Head, Luo Xiaorong, reiterated the company’s commitment to delivering high-quality work while maintaining close coordination with the project team. “We aim to complete this project on time and build trust with the Nepali people, strengthening our longstanding relationship,” he said.

Investment by Banks in Project

Everest Bank: NPR 5 billion (12.95%)

Hydroelectricity Investment and Development Company Ltd. (HIDCL): NPR 4 billion (10.36%)

Agricultural Development Bank: NPR 4 billion (10.36%)

Rastriya Banijya Bank: NPR 3 billion (7.77%)

Prabhu Bank: NPR 3 billion (7.77%)

Laxmi Sunrise Bank: NPR 2 billion (5.18%)

Nepal SBI Bank: NPR 1 billion (2.59%)

Garima Bikas Bank: NPR 1 billion (2.59%)

Kamana Sewa Bikas Bank: NPR 1 billion (2.59%)

Additional Details

Project Name: Upper Tamor Hydropower Project (285 MW)

Project Type: Semi-reservoir (capable of storing water for 6 hours daily)

Promoter Company: Tamor Energy Pvt. Ltd.

Project Location: Taplejung District (Phungling Municipality and Faktanglung Rural Municipality)

Power Purchase Agreement (PPA): Signed in Kartik 2079 BS (October/November 2022)

Water Usage: 800,000 cubic meters

Headrace Tunnel: 8.7 kilometers

Gross Head: 450 meters

Turbines: Five Pelton turbines, each of 57 MW capacity

Annual Energy Generation: 1,655 GWh (1.65 billion units)

Dry Season Generation: 446 GWh (446 million units)

Target Completion Date: 19th Jestha 2085 BS (June 1, 2028)

Revenue in First Year of Operation: NPR 10.12 billion

Projected Revenue in Ninth Year (after price escalation): NPR 12.55 billion