Khimti -I

Summary

60 MW · operating · on the Khimti Khola · in Dolakha and Ramechhap districts. Nepal's first large private IPP. Commissioned July 2000 under a January 15, 1996 BOOT PPA.

Specifications

Sources

• JICA IPSDP Final Report Annexes (Vol. 2)

Specifications (HPL project data)

The PPA That Broke the Template

Khimti-I was built under a Power Purchase Agreement signed on January 15, 1996 — before Nepal had a standardised PPA regime, before the Electricity Regulation Commission existed, and before the NPR 4.80/8.40 wet/dry tariff structure that now governs every new private IPP. Himal Power Limited (HPL) negotiated on a blank slate.

The result was structurally different from anything signed since:

The USD denomination was the critical difference. As the NPR depreciated over two decades against the dollar, Khimti-I's effective rupee tariff rose passively — without any renegotiation. During the same period, projects signed under the NPR regime watched their real tariffs erode with inflation. Khimti-I's developers were protected from exactly the currency risk that makes Nepal's standard PPA regime structurally inadequate for long-tenor debt. See PPA Pricing.

Generation — 103% of Contracted Over 25 Years

HPL's contracted energy is approximately 350 GWh/year. Over the 25 years from commissioning (2000) to 2025, total generation reached approximately 9,000 GWh — an average of ~360 GWh/year, or ~103% of contracted energy.

Source: HPL official project data; Statkraft press release (2025).

This places Khimti-I in a category occupied by very few Nepali private IPPs: a plant that has met or exceeded contracted energy over a multi-decade operating life. The Urja Khabar/MoEWRI audit finding — that zero of 100+ small IPPs exceeded 80% of design energy — does not apply to Khimti-I, a larger plant on a more reliable river system in a different generation era. The Khimti Khola, a Sun Koshi tributary in Dolakha, appears to have been accurately hydrologically characterized for the 1996 design study. See Q-Design Discharge.

Ownership — Repatriation in September 2025

HPL was founded in 1993 by Butwal Power Company (Nepal) alongside Norwegian partners. Until September 2025, the ownership structure was:

In September 2025, Statkraft and Eviny sold all shares to BPC. Himal Power Limited is now fully owned by Butwal Power Company — a Nepali state-adjacent entity. The repatriation has a structural implication: the original high-tariff USD PPA that made the project commercially viable for Norwegian investors expired in July 2020. BPC acquired a 25-year-old, debt-free, cash-generating asset at whatever price Statkraft and Eviny accepted to exit.

Whether BPC is now operating under the original PPA terms, a renegotiated successor PPA, or a new standard-form agreement is not confirmed in public sources. Given that the BOOT period ended in 2020 with NEA acquiring 50% equity for NPR 1, and BPC subsequently acquired the Norwegian stakes, the current commercial structure of HPL is materially different from the 1996 BOOT arrangement.

The Khimti–Dhalkebar Line — Corridor Consequences

Khimti-I's output is evacuated via the Khimti–Dhalkebar 220 kV double-circuit line (~75 km), financed by the World Bank and commissioned in 2016. This line was built specifically to evacuate Khimti's 60 MW (and Bhote Koshi's 36 MW) to eastern Nepal's load centres and the Dhalkebar interconnect with India.

By 2023, this corridor had become critically congested. The rapid commissioning of the Likhu cascade (Likhu-1, Likhu-2, Likhu-4, Likhu Khola A — combined ~213 MW), all routing through the New Khimti substation at the head of the Khimti–Dhalkebar line, saturated the corridor. Likhu-2 alone lost ~40% of its contracted generation in FY 2023/24 to stranded generation because the substation transformer was undersized. The line that was built for Khimti-I's 60 MW was trying to carry over 300 MW. See Buildability for the broader grid-planning failure pattern.

Historical Significance

Khimti-I is the origin point of Nepal's private hydropower sector. Every subsequent IPP PPA — every take-or-pay clause, every AD penalty formula, every wet/dry tariff differential — was written in the shadow of the 1996 Khimti PPA and the political controversy it generated. Critics argued that the USD-denominated take-or-pay structure was too favourable to foreign developers; supporters argued it was the only way to attract capital into a country with no IPP track record.

Both arguments were partially correct. Khimti-I delivered: 9,000 GWh over 25 years, 103% of contracted energy, zero recorded AD penalty disputes in public sources. What the post-Khimti standard PPA regime corrected — USD denomination, take-or-pay across the full contract, no seasonal rate differential — it may have over-corrected. The current NPR flat-rate structure with 3% escalation for eight years leaves projects exposed to exactly the long-tenor financial risks that Khimti's currency indexing and demand-charge structure protected against. See PPA Pricing.

Limitations & Controversies

PPA expired — post-2020 commercial structure unclear. The 20-year BOOT PPA expired in July 2020. NEA acquired 50% equity for NPR 1. BPC then bought out Norwegian partners in September 2025. Whether BPC now operates under the original terms, a renegotiated PPA, or a new standard-form agreement is not confirmed in public sources.

Corridor congestion. The Khimti–Dhalkebar 220 kV line that was built for Khimti-I's 60 MW is now trying to carry over 300 MW from the Likhu cascade. Likhu-2 lost ~40% of its generation in FY 2023/24 to this bottleneck. The line built for one plant has become a shared chokepoint.

Non-replicable PPA terms. The USD-denominated, CPI-indexed 1996 PPA was a product of a specific era — before standardized tariffs, before the ERC, before the current NPR regime. No modern IPP can replicate these terms, making Khimti-I a historical outlier rather than a sector benchmark.

Post-BOOT governance ambiguity. With NEA holding 50% equity and BPC holding the remaining 50%, the plant's governance straddles the public-private boundary. How NEA's triple-authority role interacts with BPC's private ownership of a strategic corridor asset is not documented in public sources.

See also

• PPA Pricing — the tariff evolution from Khimti's 1996 USD PPA to the current NPR regime
• Q-Design Discharge — why Khimti's 103% matters against the sector baseline
• Availability-Declaration Penalties — the penalty regime Khimti's PPA predates
• NEA Triple-Authority Conflict — NEA as regulator, shareholder (post-2020), and off-taker
• Buildability — the Khimti–Dhalkebar corridor congestion as grid planning failure
• Khimti–Dhalkebar 220 kV Hydropower Corridor — the 220 kV line built to evacuate this plant
• Koshi Basin — basin context for the Khimti Khola / Sun Koshi system