Nepal Moves Ahead With 670 MW Dudhkoshi Storage Hydroelectric Project

Nepal is pushing forward with one of its most ambitious energy projects yet: the 670 MW Dudhkoshi Storage Hydroelectric Project at Rabhuwaghat on the border of Khotang and Okhaldhunga districts. The government has included the project in the budget for fiscal year 2083/84, clearing the way for the contract bidding process to begin this year.

The project is designed as a major reservoir-based hydropower scheme on the Dudhkoshi River, with the goal of strengthening Nepal’s power supply and supporting broader economic growth. According to project disclosures, it is intended to increase Nepal’s supply of climate-resilient renewable electricity through construction and commissioning of the Dudhkoshi Storage Hydropower Plant.

Why this project matters

Dudhkoshi is not just another hydropower plant. It is planned as a large storage project with a dam reaching a maximum height of 220 meters, two powerhouses, and total installed capacity of 670 MW. The scale alone makes it one of Nepal’s most consequential infrastructure efforts in years.

International financing institutions are already aligned behind the project. The Asian Infrastructure Investment Bank says the project is proposed as a co-financed effort with the Asian Development Bank as lead co-financier, while other backers include the World Bank, the European Investment Bank, OFID, SFD, and the Government of Nepal together with the Nepal Electricity Authority.

What the project includes

Available project details show that the main powerhouse is planned at 600 MW, supported by a 70 MW ecological station. The total project cost is estimated at US$2.32 billion, underscoring the scale of investment needed to turn the Dudhkoshi River into a major reservoir-based energy hub.

The project area stretches across Okhaldhunga, Khotang, and Solukhumbu districts in Koshi Province. It is being developed as part of a long-term push to expand Nepal’s electricity generation with more reliable, climate-resilient capacity.

Economic opportunity comes with major trade-offs

Like most large hydropower schemes, Dudhkoshi also brings significant social and environmental challenges. Project disclosures indicate that around 3,300 households may be affected, including roughly 290 households expected to be physically and economically displaced.

The project also raises concerns over land acquisition, resettlement, and impacts on Indigenous communities. Publicly available assessments note that land acquisition and involuntary resettlement frameworks are being prepared for transmission lines and access roads, while environmental reviews point to ecosystem disruption, fish migration impacts, and forest submergence.

What happens next

With the project now prioritized in the national budget, the next major milestone is the bidding process, which the government says will begin this year. That move suggests Nepal is moving from planning and financing toward implementation on a project that could shape the country’s power sector for decades.

If delivered on schedule, Dudhkoshi would add a massive new source of renewable electricity to Nepal’s grid and reinforce the country’s status as a hydropower heavyweight in South Asia.