The process to terminate the contract for the civil structures of the Sun Koshi–Marin Diversion Multipurpose Project, including the dam (headworks) and powerhouse, has been initiated.
The decision concerns the supply and installation of hydromechanical equipment contracted with Patel-Raman JV. The previous government had repeatedly extended deadlines for the joint venture of India’s Patel Engineering and Nepal’s Raman Construction, despite unusual delays in dam construction.
The project authority stated that physical progress remains only about 10%, even though approximately 61% of the contract period has elapsed. The contractor showed no urgency to improve progress, and did not respond to notices issued to rectify delays, prompting the termination process.
Alongside cancelling the contract, the authorities have also moved to forfeit bank guarantees totaling NPR 3.6 billion, including NPR 2.4 billion from performance security and NPR 1.2 billion from advance payments held by Patel-Raman JV.
Minister of Energy, Water Resources, and Irrigation, Physical Infrastructure and Transport, and Urban Development, Kulman Ghising, held discussions with officials and the contractor on 7th Ashoj after identifying significant delays in construction.
While tunnel construction has been completed, the project has stalled as critical structures like the dam and powerhouse remain unfinished.
The contract with Patel-Raman JV was valued at NPR 14.08 billion, about 32% lower than the estimated cost, and work commenced in Magh 2079 (January 2023) with a completion deadline of Asar 2084 (June 2027). Only 10% of physical work has been achieved so far, and NPR 2.14 billion (15% of total payment) has been disbursed.
The project involved 13.3 km of tunnel boring, which was successfully pierced on 26 Baisakh 2081 (May 2024). Water from the Sunkoshi River, along the Sindhuli–Ramechhap border, will be diverted to the Marin River via the tunnel to supply the Bagmati Irrigation Project.
The project aims to provide year-round irrigation to 122,000 hectares across Dhanusha, Mahottari, Sarlahi, Rautahat, and Bara districts, and generate 31 MW of hydroelectric power.
Delays in the project have hindered irrigation expansion, affecting agricultural productivity and delaying food import substitution. Estimated annual losses due to delayed agricultural benefits (NPR 10.3 billion) and electricity generation (NPR 1.55 billion) total approximately NPR 12 billion.
Additionally, the delay affects potential benefits from tourism development at the dam site, road and bridge construction, improved transport facilities, and alternative water supply sources.