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    • Dec 14, 2021
    • 4 min read

Upper Karnali 900 MW (GMR) Hydropower Plant

Updated: Mar 27, 2023

Current Status: Construction

Upper Karnali Hydropower Plant, also known as Upper Karnali Hydro Electric Project or UKHEP in short, is an under construction Hydropower plant situated in Surkhet, Dailekh and Achham Districts in Nepal (Location: 28.8993, 81.4875). The Power Plant is sponsored by GMR Upper Karnali Hydropower Limited, a Special Purpose Vehicle (SPV) of GMR Power & Urban Infrastructure Limited under an Indian conglomerate, GMR Group. GMR Power bagged the power project in 2008 through an international competitive bidding process (Prasain 2020).


Capacity

Total capacity of the power plant is 900 MW which can generate 3,466 million units (gWh) of electricity per year (IBN 2022).


Context

In March 2022 during the visit of Nepalese President, the Prime Minister of Bangladesh emphasized on a tripartite agreement between Bangladesh, India and Nepal to set up Hydropower Plants in Nepal under Bangladesh-Bhutan-India-Nepal (BBIN) Connectivity (FE 2021a). In June 2021, the State Minister for the Ministry of Power, Energy and Mineral Resources (MOPEMR) said to the media that Bangladesh planned to import 700 MW of hydropower from Nepal (FE 2021b). Bangladesh Power Development Board (BPDB) signed a Power Purchase Agreement (PPA) with Grandhi Mallikarjuna Rao Group (GMR Group) to import 500 MW of electricity from the power plant (Sajid 2022). BPDB signed a Memorandum of Understanding (MOU) with GMR Upper Karnali Hydropower Limited in April 2017 to buy 300 MW of electricity from UKHP (Independent 2017). Bangladesh Power Development Board (BPDB) was supposed to sign a Power Purchase Agreement (PPA) with GMR Upper Karnali Hydropower Limited in July 2017 (Independent 2017). But on 14 September 2021, in the meeting of Bangladesh-Nepal Joint Steering Committee (BNJSC), Nepalese envoy proposed to sell 200 MW of electricity to Bangladesh from UKHEP (FE 2021c).


Bangladesh signed a Memorandum of Understanding (MOU) with NTPC Vidyut Vyapar Nigam Limited (NVVN) to import power from Nepal (Subedi 2018). The total budget of the project was USD 1.5 billion in 2020 in which 15% was supposed to be financed by two Nepalese banks namely Nabil Bank and Nepal Investment Bank. GMR Power was also negotiating with Asian Development Bank (ADB), Dutch Entrepreneurial Development Bank (FMO), Export–Import Bank of China (CHEXIM), Export-Import Bank of India (INEXIM) and World Bank to get External Credit Agency (ECA) loan for the project (HT 2019). But the company couldn’t seal any deal for financing by February 2022. In the third week of February 2022, the Government of Nepal (GON) extended the period of two more years to generate finance for the project (OK 2022). On 21 November 2019, the State Minister for the Ministry of Power, Energy and Mineral Resources (MOPEMR) of Bangladesh announced that the Government of Bangladesh (GOB) and GMR Power of India had already reached an understanding and would sign a deal to import 500 MW of power from its Karnali Hydropower plant in Nepal (EB 2019). On 30 January 2020, Bangladesh Power Development Board (BPDB) issued a Letter of Intent (LOI) to GMR Power for importing power for 25 years at a rate of USD 0.07712 (BDT 6.56 in 2021) per unit (Prasain 2020). A draft Power Purchase Agreement (PPA) was also sent to the Cabinet Committee on Government Purchase (CCGP) for approval.


But on 3 December 2019, Nepalese energy minister told the media that GMR Power had already signed a PPA with BPDB (Khanal 2019). On the other hand, GMR Power informed the media in February that the PPA was likely to be signed by May 2021 (MR 2021). Again in September 2021, it was revealed that the tripartite agreement between BPDB, GMR Power, NVVN was at its final stage in September 2021 (FE 2021c). But in February 2022, GMR Power again said that it contacted National Thermal Power Company Limited (NTPC) and NVVN to negotiate with GOB (OK 2022).

 

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