After Upper Karnali, Adani Group expresses interest in Nepal’s 1,902 MW Mugu Karnali Hydel Project

KATHMANDU: Indian billionaire businessman Gautam Adani has expressed interest in investing in the 1,902 MW Mugu Karnali hydropower project. Despite Adani’s longstanding interest in investing in Nepal, formal agreements have not been reached so far. Previously, the Adani Group had shown interest in the 10,800 MW Karnali Chisapani Multipurpose Project and projects like the upgrade of Kathmandu International Airport and Nijgadh Airport.

This time, sources suggest Adani’s interest is more serious. “We have received informal indications of interest, and discussions with Adani Group representatives in Nepal are scheduled within this week,” a source told *Clickmandu*. “Adani Group has been eyeing investment in Nepal’s hydropower sector for a long time, and there is a possibility of collaboration if terms align.”

Previous Attempts and Challenges

The Adani Group had previously sought to acquire the 325 MW Upper Bheri Project from businessman Deepak Malhotra but withdrew due to disagreements over valuation.

Current Developments

The Nepal Electricity Generation Company has invited proposals for investments in two projects: the 1,902 MW Mugu Karnali and the 454 MW Kimathanka Arun. A public notice issued on Sunday calls for financial proposals under a Public-Private Partnership (PPP) model, aiming for a 51% partnership. Interested companies must submit proposals within 15 days, with bids to be opened on December 22.

Chief Executive Officer of the Electricity Generation Company, Bhakta Bahadur Shahi, emphasized the preference for domestic investment. “Our intent is to encourage Nepali investors first. If no viable proposals come forward, we may consider foreign investors,” Shahi said. He noted previous controversies, such as legal challenges to Indian company NHPC’s involvement in the Phukot Karnali project, and stressed the importance of avoiding similar disputes.

Financial and Technical Details

The Mugu Karnali project is a reservoir-based hydropower initiative, estimated to cost NPR 460 billion. It is expected to generate 6,291.8 GWh annually. The dam, likely to be about 250 meters high, will span parts of Kalikot, Mugu, Humla, and Jumla districts. The feasibility study suggests the project will take 10 years to complete and achieve an internal rate of return of 10%.

Investment Challenges and Prospects

Although the company has initiated calls for domestic investors, the scale of the project, requiring over NPR 550 billion, presents challenges. The framework allows for foreign investors or joint ventures to be considered in the second round if no qualified domestic proposals are received.

Shahi acknowledged the low probability of securing sufficient domestic investment and noted that amendments to investment procedures have been made to accommodate international participation. The initiative aims to ensure that foreign involvement complements domestic efforts while addressing legal and operational concerns.

Significance of the Mugu Karnali Project

The Mugu Karnali is Nepal’s largest hydropower project under study and will play a crucial role in the nation’s energy sector. The project’s underground powerhouse and 7.7-hour daily peaking capacity underscore its potential to meet growing energy demands. The reservoir-based design also promises year-round energy production, contributing to national energy security and regional development.

As interest from major international players like the Adani Group continues, Nepal’s hydropower sector stands at a pivotal moment, balancing domestic priorities and international investment opportunities.

In the developing news, Reuters report stated that arrest warrants were issued in the United States for Gautam Adani and his nephew Sagar Adani after a grand jury in New York indicted them, along with seven others, on charges of bribery amounting to $265 million on November 20.

Authorities said Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay about $265 million in bribes to Indian government officials to obtain contracts expected to yield $2 billion of profit over 20 years, and develop India’s largest solar power plant project.