For the first time in Nepal's history, the world's six largest multilateral and bilateral development lenders have joined forces to build a single infrastructure project. The $2.32 billion Dudhkoshi Storage Hydroelectric Project — a 670-megawatt dam in eastern Nepal — will be co-financed by the Asian Development Bank, the World Bank, the Asian Infrastructure Investment Bank, the European Investment Bank, the OPEC Fund for International Development, and the Saudi Fund for Development. With the ADB already inviting contractors and consulting firms to a consultation meeting in Brussels and financial closure targeted for September 2026, a massive procurement pipeline is now taking shape.
The Project: Nepal's Largest-Ever Infrastructure Investment
The Dudhkoshi Storage Hydroelectric Project will be built on the Dudhkoshi River, spanning Khotang, Okhaldhunga, and Solukhumbu districts in eastern Nepal's Province No. 1. Its core technical specifications make it one of the most ambitious hydropower undertakings in South Asia:
- A 220-meter-high dam with headworks and spillway
- A 13.3-kilometer headrace tunnel connecting the reservoir to the powerhouse
- A 600 MW main underground powerhouse housing four turbines
- A 70 MW ecological flow power station to maintain downstream river health
- Associated electrical, mechanical, and transmission infrastructure
The project is classified as Category A (high environmental and social risk) due to its location in the geologically fragile Himalayan region, with risks ranging from seismic activity and landslides to glacial lake outburst floods. Land acquisition will cover 2,405 hectares across private, government, and forest land, affecting approximately 3,300 households, with 290 requiring physical and economic displacement.
The implementing entities are the Nepal Electricity Authority (NEA) and its fully owned subsidiary, Dudhkoshi Jalvidyut Company Limited.
An Unprecedented Financing Structure
What makes this project truly historic is the breadth of its financing coalition. The $2.32 billion is distributed across seven sources:
- Asian Development Bank (ADB): $580 million (including a $30 million grant) — project lead
- European Investment Bank (EIB): $500 million
- World Bank: $200 million
- Asian Infrastructure Investment Bank (AIIB): $200 million
- OPEC Fund for International Development (OFID): $100 million
- Saudi Fund for Development (SFD): $100 million
- Government of Nepal and NEA: $670 million
Nepal's finance ministry is providing a $1.3 billion sovereign guarantee backing the loans. The AIIB completed its concept review on February 11, 2026, and plans an appraisal decision by July, with all lenders targeting financial closure by September 2026. The project's estimated loan closing date is September 2034, with commissioning planned around 2031.
This multi-lender model follows the ADB-World Bank collaboration framework established in December 2023, where the two institutions agreed to co-finance Nepal's largest hydropower projects — with ADB leading Dudhkoshi and the World Bank leading the companion 1,063 MW Upper Arun project ($2.845 billion).
Why This Matters for Nepal — and the Region
Nepal possesses an estimated 83,000 MW of hydropower potential, of which roughly 43,000 MW is technically and economically feasible. Yet only a fraction has been developed. The country aims to reach 10,000 MW of installed capacity and has set its sights on becoming a net electricity exporter, ending its dependence on dry-season power imports.
The stakes extend well beyond Nepal's borders. India has expressed long-term interest in importing 10,000 MW of hydroelectricity from Nepal over the coming decade. In fiscal year 2023-24, Nepal exported 632 MW to India, generating over $56 million in revenue — a threefold increase from 2022. The World Bank estimates that direct electricity exports could add $3 billion to Nepal's GDP between 2024 and 2033.
Dudhkoshi is particularly valuable because it is a storage project, not a run-of-river facility. More than 90% of Nepal's existing hydropower consists of run-of-river plants that produce electricity proportional to seasonal water flow — abundant in monsoon season but scarce in winter when demand peaks. Dudhkoshi's 220-meter dam will create a reservoir capable of regulating water flow year-round, providing consistent power generation during the dry season and enabling Nepal to offer reliable baseload electricity to India's northern grid.
Procurement Implications: A Multi-Billion-Dollar Pipeline
The Dudhkoshi project creates one of the largest single-project procurement pipelines in South Asia. On February 23, 2026, Dudhkoshi Jalvidyut Company Limited — supported by the ADB and the European Union — held an in-person consultation meeting in Brussels at the Albert Borschette Congress Centre, inviting prospective contractors and consulting firms with experience in large hydropower development.
Civil Works and Construction
The bulk of procurement value lies in heavy civil construction:
- Dam construction: A 220-meter roller-compacted concrete or rock-fill dam is a marquee contract. Projects of this scale typically require international joint ventures with specialized dam-building capabilities.
- Tunnel boring: The 13.3-kilometer headrace tunnel will likely require tunnel boring machines (TBMs) and experienced underground construction firms. Geological testing at the site is underway to determine final tunneling methods.
- Underground powerhouse: Excavation and construction of the 600 MW underground complex, including caverns for turbines, transformers, and control equipment.
- Spillway and headworks: Critical flood management infrastructure at the dam site.
Electromechanical Equipment and Supplies
The project requires substantial procurement of specialized equipment:
- Four large-capacity turbines (likely Francis turbines) for the 600 MW main powerhouse
- Generators, transformers, and switchgear for both the main and ecological flow stations
- Hydromechanical gates, penstocks, and valves
- Control and monitoring systems (SCADA)
- Transmission line infrastructure connecting the powerhouse to Nepal's national grid
Consulting and Technical Services
Given the project's Category A classification and multi-lender structure, consulting opportunities are extensive:
- Construction supervision: Long-term contracts (potentially 8+ years) for international engineering firms to supervise dam, tunnel, and powerhouse construction
- Environmental and social management: Biodiversity monitoring, watershed conservation, sediment management, and resettlement programs for 290 displaced households
- Indigenous Peoples engagement: With 1,245 Indigenous Peoples households affected (171 requiring physical displacement), specialized social safeguards consulting will be required
- Geological and seismic assessment: Ongoing monitoring given Himalayan seismic risks
- Financial advisory: Structuring and managing disbursements across six lender institutions with different procurement rules
Contract Types and Procurement Rules
The ADB leads procurement coordination, meaning contracts will primarily follow ADB procurement guidelines. However, the multi-lender structure introduces complexity — the AIIB has stated it will apply ADB's Environmental and Social Framework in lieu of its own for this project. Contractors should expect:
- International Competitive Bidding (ICB) for major civil works and equipment packages
- Quality- and Cost-Based Selection (QCBS) for consulting services
- Compliance with good international practice standards on worker safety, fair employment, and grievance redress
- ADB member country eligibility requirements for bidders
Countries and Sectors Affected
The procurement impact radiates beyond Nepal:
- Nepal: The primary beneficiary, with $670 million in government/NEA counterpart funding and requirements for local labor and materials
- India: The primary electricity buyer, with long-term power purchase agreements likely to follow project completion. Indian construction firms and equipment suppliers may compete for contracts
- Europe: The EIB's $500 million contribution may create opportunities for European engineering and equipment firms, particularly from EU member states
- Middle East/Gulf: OFID and SFD financing may open doors for contractors from OPEC and Arab Fund member countries
- Japan: ADB's largest shareholder, with Japanese firms historically competitive in ADB-financed hydropower projects
The project spans multiple procurement sectors: infrastructure and construction, energy and environment, consulting services, and works contracts.
What This Means for Contractors
Firms interested in this project should act now. The February Brussels consultation was an early signal — formal procurement notices will follow once financial closure is achieved in late 2026. Here is what to do:
- Register with ADB's Consultant Management System (CMS) and monitor ADB procurement notices for Nepal. As the lead lender, ADB will publish the majority of bidding documents.
- Monitor AIIB and World Bank procurement portals for co-financed packages that may be procured under their respective guidelines.
- Form joint ventures — a project of this scale will favor consortia of international and local firms. Identify Nepali partners for civil works and equipment installation.
- Prepare for Category A safeguards requirements — bidders will need demonstrated experience in environmental and social impact management for large hydropower in seismically active regions.
- Track Nepal Electricity Authority tenders on the NEA and Dudhkoshi Jalvidyut Company websites for locally procured packages.
Looking Ahead
The Dudhkoshi project represents a watershed moment — both literally and figuratively — for Nepal's development and for multilateral cooperation. If financial closure proceeds on schedule in September 2026, major civil works tenders could begin appearing by early 2027, with construction continuing through 2031.
Combined with the companion Upper Arun project ($2.845 billion, 1,063 MW), Nepal's total MDB-backed hydropower pipeline now exceeds $5 billion — an extraordinary concentration of procurement opportunities in a single country. For contractors, consultants, and equipment suppliers with large hydropower experience, Nepal is becoming one of the most important markets in the world.
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