Khimti II

48.8 MW · generation licence recorded · on the Khimti Khola · in Dolakha district. Construction status is supported separately by project and credit-rating disclosures. A Peoples Energy Limited (PEL) project — part of the RM Group — sharing the Khimti Khola river with Khimti -I but following an entirely different developer lineage and era.

Summary

Khimti II is a 48.8 MW under-construction run-of-river project on the Khimti Khola in Dolakha. The page distinguishes it from Khimti-I, documents its PEL/RM Group ownership, and tracks its construction, PPA, financing, credit, and corridor-dependency risks.

Specifications

Sources

• NEA Annual Report FY 2024/25
• ICRA Nepal — Surveillance Rating A996/B119

Specifications (DOED / PEL data)

Not a BPC Project

Peoples Energy Limited is independent of Butwal Power Company. A common handoff assumption collapses the two Khimti projects into a single developer narrative, but the ownership is entirely separate:

• Khimti-I (60 MW, operating since July 2000) — owned by Himal Power Limited, now 100% Butwal Power Company (BPC) following Statkraft and Eviny's exit in September 2025. See Khimti -I.
• Khimti-II (48.8 MW, under construction) — developed by Peoples Energy Limited, an RM Group company. BPC holds no equity. BPC's relevance to Khimti-II is limited to its presence as the Khimti-I owner on the same corridor.

The RM Group is a diversified Nepali industrial conglomerate with interests extending beyond hydropower. PEL was established as a dedicated generation SPV for the Khimti-II project. This ownership separation — one river, two projects, two developers, different eras — exemplifies the fragmented IPP landscape in Nepal's private generation sector.

The Khimti Numbering — One River, Two Eras

The Khimti Khola hosts two distinct projects separated by a generation gap:

The 1996 Khimti-I PPA was written on a blank slate — USD-denominated, with no seasonal tariff split and no capacity fee structure. By the time Khimti-II's PPA was signed in October 2015, the standard-form NPR PPA template was fully entrenched: wet/dry differential, flat 3% × 8-year escalation, 80% take-or-pay. Two projects on the same river, built under entirely different commercial regimes — Khimti-I's developers were currency-hedged; Khimti-II's are not. See PPA Pricing.

The PPA — Standard Post-2015 Structure

Khimti-II's 30-year PPA, signed October 1, 2015, is the standard post-2010 NEA template: NPR 4.80/kWh in the wet season, NPR 8.40/kWh in the dry season, with 80% take-or-pay coverage and 3% annual escalation for the first eight years only. The PPA provides neither currency indexation nor a demand-charge component — exactly the structural weaknesses that the Khimti-I 1996 PPA's USD denomination was designed to avoid.

At 75:25 debt-to-equity, Khimti-II's leverage sits on the lower end of the Nepal IPP range (most private projects since 2015 have been at 78:22 or higher). The 10-bank consortium led by Sanima Bank reflects both the project's scale (NPR 8.65 billion total cost, ~NPR 177M/MW) and the fragmented domestic lending landscape: no single Nepali bank can underwrite a project above NPR ~2 billion on its own books.

Construction — Late-Stage but Delayed

Construction reached ~50% completion by April 2023 and ~80% by mid-2024, with the required commercial operation date (RCOD) originally set for July 2023 and subsequently extended by one year to July 2024. The target COD is mid-2024 (2081 BS).

Khimti-II's 6.293 km headrace tunnel — the longest single underground structure in the project — is the critical-path item typical of Nepali RoR construction. Three 16.267 MW vertical-axis Pelton turbines (total 48.8 MW installed) operate under a 353.7 m gross head with 16.11 m³/s design discharge. The Pelton selection reflects the high-head, relatively low-flow profile of the upper Khimti Khola.

The Khimti–Dhalkebar Corridor — Shared Risk

Khimti-II evacuates through the Khimti–Dhalkebar 220 kV double-circuit line, the same ~75 km corridor that carries Khimti-I (60 MW), the entire Likhu cascade (Likhu -1, Likhu -2, Likhu-4, Likhu Khola 'A — combined ~213 MW), and Upper Tamakoshi (456 MW). The line was originally financed by the World Bank to evacuate Khimti-I's 60 MW and Bhote Koshi's 36 MW. By 2023 it was carrying over 300 MW of connected capacity through the New Khimti substation.

The congestion that stranded ~40% of Likhu -2's contracted generation in FY 2023/24 — caused by an undersized 100 MVA substation transformer — is the defining transmission risk for every project on this corridor. The late-2023 transformer upgrade to 300 MVA relieved the immediate bottleneck, but a single substation failure returns all Khimti–Dhalkebar projects to stranded-generation status. For Khimti-II, a project still under construction, commissioning into a corridor that has already demonstrated congestion failure is a structural risk that no PPA provision addresses. See Buildability and Stranded Generation.

IPO Connection — Pre-Revenue Fundraising

Peoples Energy Limited sought approval from the Securities Board of Nepal (SEBON) to issue an initial public offering (IPO) during the construction phase — before a single kilowatt-hour had been generated. This follows the pre-revenue IPO pattern that has become a defining feature of Nepal's post-2015 hydropower development: promoters seek public equity to meet the 25% equity component of 75:25 debt-equity structures, issuing shares while the project is still a hole in the ground.

The rationale is promoter-side: IPO proceeds reduce the equity burden on the RM Group's balance sheet and provide a secondary-market exit path before commissioning risk has been resolved. For public investors, the trade is buying into a project with zero operational track record, no revenue, and incomplete construction — at a valuation set by the promoter's cost projections. The Urja Khabar/MoEWRI audit finding that zero of 100+ small IPPs exceeded 80% of design energy is the relevant baseline for what public shareholders are actually buying. See IPO Hydropower Bailout.

Credit Profile

CARE Ratings Nepal assigned CARE-NP BB to Khimti-II's bank facilities in June 2023, and ICRA assigned ICRA IR BB- in July 2024. Both ratings sit in the speculative grade — one notch below the BBB- assigned to Likhu Khola 'A and Likhu -2 (both operational), and above the B+ assigned to Likhu-4 (under construction). The ratings reflect:

• Construction execution risk — the project was at ~80% completion at the time of the ICRA rating, with the tunnel remaining the critical path item
• Single-corridor dependency — the Khimti–Dhalkebar line is shared with substantially larger generators that can crowd out smaller IPPs during congestion events
• Standard PPA weaknesses — no currency hedge, 3% escalation for 8 years only, 80% take-or-pay leaving 20% exposed to NEA dispatch discretion
• Mitigants — the 75:25 gearing is conservative by Nepal standards, the 10-bank consortium diversifies refinancing risk, and the Pelton turbine configuration on a high-head site implies strong operating margins once commissioned

Limitations & Controversies

Several fields depend on rating reports and source snapshots rather than post-COD operating evidence. RCOD, target COD, construction progress, final cost, IPO status, and corridor congestion exposure should be refreshed against current project disclosures before financial or delivery conclusions are treated as settled.

See also

• Khimti -I — the 60 MW predecessor on the same river (different developer, different era)
• Khimti–Dhalkebar 220 kV Hydropower Corridor — the 220 kV backbone shared with the Likhu cascade
• Likhu -2 — stranded generation case study on the same corridor
• Likhu Khola 'A — another IPP on the same corridor (MV Dugar Group)
• Buildability — transmission planning failure as structural IPP risk
• Stranded Generation — the grid evacuation bottleneck problem
• PPA Pricing — the tariff evolution from Khimti-I's USD PPA to the current NPR regime
• IPO Hydropower Bailout — the pre-revenue IPO pattern
• Koshi Basin — basin context