Financial Closure Completed for 135 MW Manang-Marsyangdi: 24 Billion to be Channeled via Exim Bank

Kathmandu: The Export-Import (Exim) Bank of China has committed an investment of around NPR 24 billion (approximately USD 175.25 million) in the 135 MW Manang-Marsyangdi Hydropower Project (MMHP), being developed by Manang-Marsyangdi Hydropower Company Pvt. Ltd. (MMHCPL).

The project, spearheaded by Butwal Power Company (BPC) Limited, secured investment management from Exim Bank and other sources on Friday (November 22). The financial closure and commencement of construction were announced in the presence of the Minister of Energy, Water Resources, and Irrigation, Deepak Khadka; the Minister of Communication and Information Technology, Prithvi Subba Gurung; and Chinese Ambassador to Nepal, Chen Song.

Exim Bank will provide a loan investment of CNY 1.2425 billion, equivalent to USD 175.25 million (approximately NPR 23.73 billion). The remaining loan amount has been arranged from other sources, according to the company. The estimated total project cost is around USD 323 million (approximately NPR 43.73 billion).

The project's promoters include BPC and several Chinese companies: SCIG International Limited, Xincheng International Investment Company Limited, and QYEC International Company Pvt. Ltd. Their joint venture, SCIG International Nepal Hydro Joint Development Investment Co. Pvt. Ltd., is also a key investor.

The project will be financed with 80% debt and 20% equity, with BPC holding 20% of the equity and Chinese investors holding 80%. Additionally, the company plans to allocate shares to local residents around the project site as per the prevailing laws.

According to BPC, the project is being executed under the EPC (Engineering, Procurement, and Construction) model by the Chinese company Sino Hydro Bureau 7 Co. Ltd. The consulting firm for the MMHP is the North-West Engineering Company of China. The target is to complete construction within 42 months.

This peaking-reservoir project (PROR) is located in Chame and Nasong rural municipalities of the Manang district. The company stated that the gross head of the project would be 430 meters. The dam will be constructed in Koto, Ward No. 3 of Chame Rural Municipality, while the powerhouse will be in Ward No. 9 of the same municipality. A 6 km headrace tunnel will channel water from the Marsyangdi River to the powerhouse. Studies suggest that the project will generate 766 GWh of electricity annually.

The MMHP is the first of three hydropower projects in the Marsyangdi River basin, developed under a cascade concept and jointly financed by domestic and foreign entities. The other two projects in the Manang and Lamjung districts are the 139.2 MW Lower-Manang-Marsyangdi and the 327 MW Upper-Marsyangdi-2. The combined installed capacity of these three projects is estimated at 601.2 MW, with a total cost of around USD 1.2 billion. Each project will be developed by separate companies in collaboration with BPC and various Chinese companies.

Despite uncertainties regarding Nepal’s hedging system and challenges posed by the COVID-19 pandemic, land acquisition, tree-cutting issues, and the 2021 Marsyangdi River flood, construction has persisted.

Key Highlights from the Speakers

During the financial closure ceremony, ministers, the Chinese ambassador, and other notable speakers shared their perspectives. Below is a summary of their remarks:

Deepak Khadka (Minister: Ministry of Energy, Water Resources, and Irrigation): The progress of MMHP, along with the Lower Manang-Marsyangdi and Upper Marsyangdi-2 projects under BPC's leadership, is a significant achievement. These efforts are expected to contribute substantially to the government’s goal of producing 28,500 MW of electricity by 2035. I officially encourage companies involved in such projects. BPC has attracted credible investors, providing hope for more foreign investments in Nepal’s energy sector.

Prithvi Subba Gurung (Minister: Ministry of Communication and Information Technology): The strong partnership between Nepal and China has added a new dimension to our hydropower development. The construction of these projects in the Marsyangdi River Basin has opened doors for further investment. Moreover, local job creation will uplift the standard of living in the region. As a lawmaker from the Lamjung district, I fully support this project's development.

Chen Song (Chinese Ambassador to Nepal): Diplomatic relations between Nepal and China began in 1955, marking the start of many cooperative efforts. The initiation of MMHP construction is a testament to this partnership. We have committed USD 1.2 billion to three projects in the Marsyangdi River Basin via Exim Bank. This will not only optimize Nepal’s water resources but also strengthen its electricity grid. With the 70th anniversary of Nepal-China diplomatic ties approaching in 2025, we look forward to further collaboration in hydropower, solar, wind, biomass, and green hydrogen projects.

Tek Bahadur Gurung (MP, Manang): Infrastructure is key to development. The road from Besisahar in Lamjung to Chame in Manang needs upgrading to allow large trucks to reach the project site. While the Nepal Army opened the track after 13 years, a lack of government funding and prioritization has hindered progress. Improving this road is crucial for completing hydropower projects on time. The project is expected to generate local employment, and I hope it faces no obstacles.

Padma Jyoti (Chairman: BPC): We are delighted to announce the financial closure and construction start of MMHP. Support from the Chinese Exim Bank has motivated us to push forward. This collaboration has strengthened Nepal’s sustainable development and international relations. Despite challenges with land acquisition, the COVID-19 pandemic, and the Marsyangdi River's flood, we have made progress. We are confident of continued government support.

Li Wenzhi (General Manager: Sichuan Provincial Investment Group Co., Ltd.): China is not only an investment partner but also a good neighbor to Nepal. Our cooperation has deepened, especially after President Xi Jinping's visit to Nepal. Involvement in the MMHP’s construction symbolizes Himalayan cooperation and joint hydropower development. We are determined to complete the project while promoting industry and technology locally.