Name: Upper Khorunga Hydropower Station
Address: NP

Overview

The Upper Khorunga Hydropower Station is an operational hydroelectric powerplant situated in the Terhathum District of Nepal. This facility represents a key component of the regional energy infrastructure, utilizing the natural flow of the Khoranga River to generate electricity. As a run-of-river hydro-electric plant, the station is designed to harness the kinetic energy of the river's flow with minimal reservoir storage, distinguishing it from large-scale storage or pumped-storage hydroelectric schemes. The plant is currently operated by Terhathum Power Company Pvt. Ltd., which manages the operational status and maintenance of the facility to ensure consistent power generation for the local grid.

The station has an installed capacity of 7.5 MW, a scale typical for small to medium-sized run-of-river projects in the Nepalese Himalayan region. This capacity allows the plant to contribute a steady baseline of renewable energy to the Terhathum District and surrounding areas. The use of water as the primary fuel source classifies the Upper Khorunga Hydropower Station within the broader category of renewable energy infrastructure, offering a low-carbon alternative to thermal power generation. The run-of-river classification implies that the plant's generation profile is closely tied to the seasonal variations in the Khoranga River's discharge, although the specific hydrological data for the river is managed by the operator.

Located in Nepal, the Upper Khorunga Hydropower Station benefits from the significant topographical gradients characteristic of the country's river systems. The Terhathum District provides a strategic location for such energy infrastructure, facilitating the transmission of generated power to nearby urban and rural centers. The plant was commissioned in 2076, marking its entry into the operational phase of the national energy mix. This commissioning date places the facility among the more recent additions to Nepal's growing portfolio of small hydroelectric projects, reflecting the country's ongoing efforts to diversify its energy sources and enhance grid reliability through decentralized generation assets.

The operational model of the Upper Khorunga Hydropower Station aligns with the broader trends in Nepal's hydropower sector, where private operators like Terhathum Power Company Pvt. Ltd. play a crucial role in developing and maintaining smaller-scale facilities. The 7.5 MW output is sufficient to support local industrial and residential demand, reducing the reliance on imported energy or diesel-based backup generators. As an operational facility, the plant continues to contribute to the energy security of the Terhathum District, leveraging the sustainable resource of the Khoranga River. The station's design and operation reflect a balance between maximizing energy yield and minimizing the ecological footprint associated with large-scale dam construction, a common consideration in run-of-river hydroelectric developments in sensitive mountainous terrains.

Why it matters

The Upper Khorunga Hydropower Station represents a significant case study in Nepal’s evolving energy infrastructure, specifically within the framework of Independent Power Producer (IPP) projects. As an operational facility in the Terhathum District, the plant exemplifies the strategic public-private partnership model that has become central to the Kingdom’s efforts to harness its hydroelectric potential. This model is designed to leverage private sector capital and operational efficiency while ensuring long-term public ownership of critical energy assets.

Independent Power Producer Framework

In the context of Nepal’s energy sector, the designation of Upper Khorunga as an Independent Power Producer highlights the shift away from sole reliance on state-owned utilities. The plant, operated by Terhathum Power Company Pvt. Ltd., functions as a distinct entity responsible for generation, maintenance, and initial commercial output. This structure allows for specialized management of the run-of-river technology utilized on the Khoranga River, optimizing the 7.5 MW capacity for local and grid-level distribution. The IPP model reduces the immediate fiscal burden on the national treasury by attracting private investment for construction and commissioning, which was completed in 2076.

The significance of this approach lies in its ability to accelerate project timelines. By delegating operational responsibilities to a dedicated company, the state can focus on broader grid integration and policy formulation. The Upper Khorunga project demonstrates how smaller-scale hydroelectric facilities can be efficiently managed under this framework, providing a replicable template for other districts seeking to expand their renewable energy portfolios without excessive public debt accumulation.

Public-Private Partnership and Asset Transfer

A defining feature of the Upper Khorunga Hydropower Station’s operational model is the mechanism for eventual government takeover. Under the specific terms of the generation licence, the plant is scheduled to be handed over to the government once the licence period expires. This clause is a cornerstone of the public-private partnership strategy in Nepal, ensuring that the asset ultimately returns to public control after the private operator has recouped investments and achieved agreed-upon returns.

This transfer mechanism mitigates long-term privatization concerns while incentivizing private sector participation. The government benefits from a fully operational, maintained facility without bearing the initial capital expenditure risks. For the Terhathum District, this ensures sustained energy security and local economic benefits through job creation and infrastructure development during the private operation phase. The eventual transition to state ownership guarantees that the 7.5 MW generation capacity remains a public good, supporting regional stability and contributing to Nepal’s broader goal of energy self-sufficiency. This model balances immediate development needs with long-term strategic asset management, making Upper Khorunga a pivotal example of effective energy policy implementation in the region.

Technical specifications and infrastructure

The Upper Khorunga Hydropower Station operates as a run-of-river hydroelectric facility, a design choice that leverages the natural flow of the Khoranga River to generate electricity without requiring a large reservoir for significant water storage. This configuration is typical for the hilly terrain of the Terhathum District in Nepal, where the gradient of the river provides the necessary head for power generation while minimizing the land area submerged by the water body. The plant is situated within the administrative boundaries of Terhathum District, utilizing the specific hydrological characteristics of the Khoranga River to maintain consistent output during operational periods.

The installed capacity of the station is 7.5 MW, which contributes to the regional energy mix in eastern Nepal. The facility is operated by Terhathum Power Company Pvt. Ltd., which manages the day-to-day operations and maintenance of the infrastructure. The plant achieved operational status and was commissioned in 2076, marking its entry into the national energy grid. This commissioning date aligns with the broader timeline of small to medium-scale hydroelectric developments in the region, aimed at decentralizing power generation and reducing transmission losses.

Infrastructure and Grid Connection

The generated electricity from the Upper Khorunga Hydropower Station is fed into the national grid through a connection point at Jirikhimti Bazar. This specific location serves as a critical node for distributing power from the Terhathum District to surrounding areas, ensuring that the 7.5 MW output reaches consumers efficiently. The infrastructure includes the necessary intake structures, penstocks, turbine halls, and transmission lines required to convert the kinetic energy of the Khoranga River into electrical energy and transport it to the grid connection point. The run-of-river design implies that the infrastructure is optimized for continuous flow rather than peak storage, influencing the layout of the intake and tailrace channels along the riverbed.

Parameter	Value
Entity Type	Hydroelectric powerplant
Primary Fuel/Source	Water (Khoranga River)
Country	Nepal (NP)
Administrative Region	Terhathum District
Operator	Terhathum Power Company Pvt. Ltd.
Operational Status	Operational
Installed Capacity	7.5 MW
Commissioning Year	2076
Grid Connection Point	Jirikhimti Bazar
Design Type	Run-of-river

Ownership and corporate structure

Terhathum Power Company Pvt. Ltd. serves as the primary operator and corporate entity responsible for the Upper Khorunga Hydropower Station. As the designated operator, the company manages the day-to-day technical and commercial activities of the facility located in the Terhathum District of Nepal. The corporate structure of Terhathum Power Company Pvt. Ltd. is organized as a private limited company, a common legal form for independent power producers within the Nepalese energy sector. This structure allows for defined shareholder liability and streamlined decision-making processes essential for the operation of run-of-river hydroelectric assets.

Within the broader context of Nepal's energy infrastructure, Terhathum Power Company Pvt. Ltd. functions as an Independent Power Producer (IPP). This classification indicates that the entity operates the generation asset independently of the state-owned utility's direct operational control, typically selling generated electricity to the national grid under specific power purchase agreements. The status as an IPP is significant for the Upper Khorunga project, as it implies that the company bears the primary responsibility for capital expenditure, operational maintenance, and revenue collection for the 7.5 MW capacity plant.

The commissioning of the Upper Khorunga Hydropower Station in 2076 marks a key milestone in the corporate history of Terhathum Power Company Pvt. Ltd. This date reflects the culmination of development efforts undertaken by the company to harness the flow from the Khoranga River. As an operational entity, the company continues to manage the plant's performance, ensuring that the run-of-river mechanism effectively converts water flow into electrical output. The corporate governance of Terhathum Power Company Pvt. Ltd. remains focused on maintaining the operational status of the facility, contributing to the regional energy supply in the Terhathum District.

Financial structure and investment

The development of the Upper Khorunga Hydropower Station was supported by a financial structure totaling NPR 1 billion, reflecting the capital requirements for a run-of-river facility in the Terhathum District of Nepal. This investment facilitated the construction and commissioning of the plant, which operates under the management of Terhathum Power Company Pvt. Ltd. The funding model relied on a strategic mix of debt and equity to balance risk and return for the stakeholders involved in the 7.5 MW project.

Banking Consortium

The debt portion of the financial structure was led by a consortium of three major financial institutions: Machhapuchhre Bank, Nepal Bangladesh Bank, and Janata Bank Nepal. These banks provided the necessary liquidity to cover the initial capital expenditures associated with the hydro-electric infrastructure. The involvement of multiple lenders helped distribute the credit risk across different banking entities, ensuring financial stability during the construction phase that culminated in the plant's commissioning in 2076.

Debt-Equity Ratio

The capital structure was defined by a 73%-27% debt-equity ratio. This means that 73% of the total NPR 1 billion investment was funded through debt instruments provided by the banking consortium, while the remaining 27% was covered by equity contributions from the shareholders of Terhathum Power Company Pvt. Ltd. This ratio is typical for medium-sized hydroelectric projects in Nepal, where debt financing often dominates due to the predictable cash flows generated by run-of-river operations on the Khoranga River.

Financial Component	Details
Total Investment	NPR 1 billion
Debt Financing	73% (Led by Machhapuchhre Bank, Nepal Bangladesh Bank, Janata Bank Nepal)
Equity Financing	27%
Operator	Terhathum Power Company Pvt. Ltd.

What is the role of IPPs in Nepal's energy sector?

The Upper Khorunga Hydropower Station exemplifies the operational model of Independent Power Producers (IPPs) within Nepal’s decentralized energy infrastructure. As a run-of-river facility, it relies on the natural flow of the Khoranga River to generate electricity, a design choice that minimizes reservoir size and environmental disruption while maintaining consistent output. The plant is operated by Terhathum Power Company Pvt. Ltd., a private entity that manages the technical and commercial aspects of the station. This structure is characteristic of the Nepalese hydropower sector, where private investment plays a crucial role in expanding generation capacity beyond state-owned utilities.

In the Nepalese energy market, IPPs typically sell their generated electricity to the Nepal Electricity Authority (NEA), which acts as the primary off-taker and distributor. This arrangement allows private companies like Terhathum Power Company to secure revenue streams through power purchase agreements, reducing financial risk and encouraging further investment in small and medium-scale hydro projects. The 7.5 MW capacity of the Upper Khorunga station contributes to the regional grid, helping to stabilize supply in the Terhathum District and surrounding areas. By commissioning in 2076, the station joined a growing network of operational hydro plants that collectively enhance Nepal’s energy security and reduce reliance on imported fuels.

Market Dynamics for Small Hydro IPPs

Small hydroelectric projects, such as the Upper Khorunga station, are vital to Nepal’s energy strategy due to the country’s abundant water resources and varied topography. These projects often face unique challenges, including seasonal flow variations and infrastructure costs, but they offer faster development cycles compared to large dam projects. The involvement of private operators ensures that management practices can be tailored to local conditions, improving efficiency and maintenance responsiveness. The sale of power to the NEA integrates these smaller outputs into the national grid, allowing for a more resilient and diversified energy mix. This model supports rural electrification and economic development in districts like Terhathum, where access to reliable power is essential for local industries and households.

How does run-of-river hydroelectricity work?

Run-of-river hydroelectricity is a generation method that harnesses the kinetic energy of flowing water with minimal storage, distinguishing it significantly from traditional reservoir-based systems. The Upper Khorunga Hydropower Station utilizes this technology, drawing directly from the natural flow of the Khoranga River to generate 7.5 MW of electricity. This approach relies on the continuous movement of water through a channel or penstock to drive turbines, rather than storing large volumes of water behind a massive dam wall.

Contrast with Reservoir Systems

Unlike reservoir-based hydroelectric plants, which require significant impoundment of water to create a large lake or reservoir, run-of-river systems maintain a more natural water level. Reservoir systems often involve substantial land inundation, allowing for flexible power generation by releasing stored water during peak demand periods. In contrast, run-of-river facilities like Upper Khorunga depend heavily on the immediate availability of water flow. This means power generation can fluctuate with seasonal variations in the river's discharge, offering a more consistent but sometimes less flexible energy output compared to the "battery-like" storage capacity of large reservoirs.

Utilization of the Khoranga River Flow

At the Upper Khorunga station, the flow from the Khoranga River is diverted into a channel or pipeline that leads to the turbine house. This diversion creates a "head," or vertical drop, which accelerates the water, increasing its potential energy. As the water passes through the turbine blades, this energy is converted into mechanical energy, which then drives a generator to produce electricity. The water is then returned to the river downstream, often with minimal ecological disruption compared to the large standing bodies of water created by reservoir dams. This method is particularly effective in the Terhathum District of Nepal, where the topography provides sufficient gradient to generate power without the need for extensive water storage infrastructure.

Upper Khorunga Hydropower Station