Nepal's Investment Board approves Rs 21 billion for two semi-reservoir plants

What happened

The board approved Rs 10.75 billion for the 58.9 MW Nar Khola semi-reservoir project and Rs 10.42 billion for the 46.72 MW Sani Bheri-3 semi-reservoir project, according to OnlineKhabar English and myRepublica. The news reports did not name the developers. Global Energy Monitor, a project tracker, lists Nar Khola Hydro Energy as the owner of the Nar Khola plant in Manang, Gandaki Province, and Sani Bheri Hydropower as the owner of Sani Bheri 3 in Western Rukum, Karnali Province. It lists both as pre-construction.

The same meeting made several decisions about how the board works. It gave the necessary powers to the chief executive officer of the Investment Board office, named by myRepublica as Yangki Ukyab, to carry out approved projects and serve investors. It also told the office to prepare the legal basis for moving unsolicited proposals through a competitive process, using the Swiss Challenge method where needed.

The board said it will give priority to proposals for infrastructure that uses the latest information technologies, including artificial intelligence (AI). Priority will depend on how much a project uses Nepal's renewable energy, creates jobs and supports economic growth. At the same meeting, the board set a February 2028 target for commercial generation at the 900 MW Arun-3 project and agreed to move the 900 MW Upper Karnali project forward under its development agreement.

The engineering behind it

A semi-reservoir plant sits between two common designs. A pure run-of-river plant uses water as it arrives and stores almost none. A full storage plant builds a high dam and holds water for months. A semi-reservoir plant, often called peaking run-of-river, has a smaller dam and a pond, called pondage. In general, this pond stores enough water for some hours, so the plant can run at full power when demand is highest, usually in the evening.

This changes the design of the whole scheme. The dam and intake must hold back water and still pass floods and sediment safely. The powerhouse is usually sized larger than the average river flow would need, because it must run hard for a few hours and then rest. Electrical engineers then plan when the stored water is released, matching generation to the daily load curve of the grid. Sediment is a constant concern, because a pond that fills with silt loses its storage. The Kathmandu Post has reported that silt has cut the usable depth of the Kulekhani reservoir from 57 m to about 46 m since 1982.

Cost per megawatt is a simple first check on any hydropower plan. Using the approved amounts, Nar Khola comes to about Rs 182 million per MW and Sani Bheri-3 to about Rs 223 million per MW. Figures like these depend on site conditions such as head, flow, geology and access roads, so the comparison only starts the engineering question. It does not answer it.

The Swiss Challenge method, in general, works like this. A private company sends a project idea that the government did not ask for. The government publishes it and invites others to offer better terms. The first company then has the right to match the best counter-offer. The aim is to keep private ideas moving while still testing them against competition.

What it means in Nepal

Dry-season power is the main reason peaking plants matter. An NEA plan reported by Khabarhub in September 2026 said only about 30 percent of Nepal's installed capacity is available in the dry season. Plants that can shift their output into peak hours make better use of limited winter water. This does not add water, but it moves generation to the hours when the grid needs it most.

Sani Bheri-3 is in Karnali Province, where hydropower use is very low. The Kathmandu Post reported in March 2026 that the Karnali, Tila and Bheri rivers have an estimated potential of about 18,000 MW, while the province produces only about 10 MW. Rukum West produced 0.35 MW of that. The same report said only about a third of the province's population has direct access to electricity. The NEA regional office counted 19 projects with 4,541 MW under survey in the province at that time.

Approval by the board is one step, not the start of construction. Both projects still need financing and construction contracts before work begins. The board's new rules on unsolicited proposals and AI-linked infrastructure are policies, not projects yet. Their effect will depend on the legal rules the office now has to draft, and on whether investors respond.