Urja Khabar
Kathmandu: The devastating Bhotekoshi–Trishuli flood of August 26 has put nearly Rs 10 billion in bank loans and investments at risk, with several hydropower projects financed by Nepal’s commercial banks suffering severe damage.
According to the Nepal Bankers’ Association (NBA), four of the nine hydropower projects financed by commercial banks were directly and severely affected by the flood. The affected projects are Mailung Khola (5 MW), Langtang Khola (20 MW), Rasuwagadhi (111 MW), and Upper Trishuli-3B (37 MW). Bank exposure to these projects alone is estimated at around Rs 7.5 billion.
The remaining five projects—Super Trishuli, Upper Mailung ‘A’, Salasungi, Hira Ratna and Prime Hydro—did not suffer direct physical damage. However, electricity generation and sales from the 78 MW Salasungi Hydropower Project have been disrupted after the flood swept away its transmission line.
The impact extends beyond projects financed by commercial banks. Hydropower projects backed by the Government of Nepal, Nepal Electricity Authority (NEA), Employees Provident Fund and Citizens Investment Fund have also sustained significant damage.
Damaged Projects
Three banks—Laxmi Sunrise Bank, Siddhartha Bank and Kumari Bank—have collectively invested around Rs 4 billion in the Langtang Khola Hydropower Project in Rasuwa.
Similarly, Upper Trishuli-3B has a total investment agreement of around Rs 5.76 billion with banks and financial institutions. Nabil Bank has led the financing consortium, with the Hydropower Investment and Development Company and Nepal Bank also signing loan agreements. The project has additionally received around Rs 2.46 billion in investment from the NEA and Nepal Telecom.
The 111 MW Rasuwagadhi Hydropower Project, meanwhile, has been completely devastated by the latest flood. Nabil Bank and Kumari Bank had previously extended emergency financing after the project suffered flood damage last year. Chilime Hydropower Company, a subsidiary of the NEA, is the project's major promoter. Kumari Bank had provided around Rs 2 billion, while Nabil Bank had financed approximately Rs 498 million for reconstruction and maintenance.
The 5 MW Mailung Khola Hydropower Project has also sustained significant damage. NMB Bank is its principal lender, while Global IME Bank has participated in co-financing. The two banks have invested around Rs 270 million in the project.
Transmission Damage
The 78 MW Salasungi Hydropower Project provides another example of how flood damage to transmission infrastructure can affect bank-financed projects. Although the power plant itself was not directly damaged, electricity distribution has been halted after its transmission line collapsed.
The project, led by Nepal Investment Mega Bank and financed by Kumari Bank and Citizens Bank, had secured loans totaling around Rs 9.53 billion.
Beyond Hydropower
The banking sector's exposure is not limited to hydropower projects. Commercial banks have also extended around Rs 2.5 billion in loans to individuals and businesses in flood-affected Rasuwa, Nuwakot and Dhading districts.
With exposure across hydropower projects, transmission infrastructure, businesses and affected communities, the total risk to the banking sector from the Bhotekoshi–Trishuli flood is estimated at around Rs 10 billion.
The scale of the damage has raised concerns over the financial health of affected hydropower companies, loan recovery and the need for reconstruction financing as the sector begins assessing the full cost of the disaster.
