Namlan Khola Hydropower Project is a proposed 135 MW daily peaking run-of-river scheme located in Karnali Province, northwest Nepal. The project is being promoted by Apollo Energy Pvt. Ltd. with Lahmeyer International GmbH serving as the consultant for engineering and environmental design.
The project lies in a remote rain-shadow region with one of the lowest rainfall levels in Nepal, averaging only 434 mm annually. The Namlan Khola has a catchment area of 3,508 km2, and long-term hydrological records show average discharges ranging from 10 m3/s in winter to more than 100 m3/s in the monsoon. Sediment yield at the site is comparatively low for Himalayan conditions, estimated at 1.17 million tonnes per year. Geological investigations indicate favourable tunnelling conditions with granite, migmatite, and gneiss formations. Seismic hazard analysis estimates a peak ground acceleration of 0.13g for the operating basis earthquake and 0.40g for the safety evaluation earthquake.
From an environmental and social perspective, an ecological flow of ten percent of the monthly average discharge has been assumed, although detailed assessments are still pending. Surveys confirm the presence of snow trout species, including Schizothorax richardsonii, which is listed as vulnerable, and the provision of a fish ladder is recommended. The potential risk of GLOFs is considered limited since the largest glacial lake within 50 km is small at 0.19 km2, with only a moderate impact estimated in the event of a burst.
The scheme comprises a concrete gravity dam, 44.5 m high, forming a small reservoir with a net storage capacity of 0.64 million m3, enabling daily peaking operation. Water will be diverted through a twin intake to an underground pressurised desander, then conveyed via a 4.9 km headrace tunnel to a vertical pressure shaft and surge tank. Power will be generated in an underground powerhouse housing two vertical axis Francis turbines, each coupled to a synchronous generator, with a combined installed capacity of 89.7 MW under a net head of about 285 m. Generated power will be evacuated through a 20 km, 132 kV transmission line connecting to the Upper Mugu Karnali switchyard. Optimisation studies recommend a design discharge of 36.5 m3/s, ensuring around six hours of daily peaking operation during the dry season.
Average annual energy generation is estimated at about 467 GWh, with 30 percent produced in the dry season and 70 percent in the wet season. Revenues are projected based on current Nepal Electricity Authority tariffs, which provide NPR 10.55 per kWh for dry season peak hours, NPR 8.40 per kWh for dry off-peak hours, and NPR 4.80 per kWh during the wet season. With tariff escalation allowed for the first eight years of operation, annual revenues are expected to reach NPR 2,944 million in the first year of generation and increase to around NPR 3,650 million by year nine.
The total estimated cost of the project is USD 127.1 million, including USD 119.9 million in construction and USD 7.2 million in other costs. Construction is planned to begin in 2029, subject to permits, environmental approvals, and financial closure, and will take approximately four years. The economic analysis indicates highly favourable results with an ENPV of NPR 45,605 million, an EIRR of 34 percent, and a benefit-cost ratio of 2.85. Financial analysis confirms viability with an NPV of NPR 8,914 million and an IRR of 11.2 percent (post-tax), which is well above the weighted average cost of capital of 7.9 percent. The estimated unit cost of generation is NPR 5.49 per kWh (USD 0.035/kWh).
Despite these strong fundamentals, two key financial risks remain. Electricity tariffs have been frozen since 2012, apart from limited escalation during the initial eight years of operation, while inflation continues to drive up operating costs. In addition, the Nepalese Rupee has lost value against the US Dollar, weakening project returns due to the foreign currency repayment obligations on loans. Addressing these tariff and currency risks through appropriate policy adjustments would substantially improve project performance.
In conclusion, the study confirms that the Project is technically feasible, environmentally manageable, and financially attractive. Timely tariff adjustments and currency risk management will be critical to unlocking its full value for Nepal’s power sector.