Bhotekoshi Flood: Disaster deals a major blow to Nepal’s economy

KATHMANDU, Aug 28: The devastating flood in the Bhotekoshi River has dealt a major blow to Nepal’s economy, causing extensive damage to private homes and property, roads, bridges, hydropower projects, transmission lines, tourism infrastructure and businesses in Rasuwa, Nuwakot, Dhading and other districts.

The disaster is estimated to have caused damage of around Rs 200 billion. Sushil Kumar Shrestha, a senior divisional engineer at the National Disaster Risk Reduction and Management Authority, said the government would have to spend a huge amount on reconstruction, placing significant pressure on the economy.

“The Bhotekoshi disaster is not just a natural calamity. It has delivered an economic shock to infrastructure, energy, trade and local economies,” Shrestha said.

The flood has extensively damaged riverside markets, settlements, roads, bridges and hydropower infrastructure. The government will have to mobilise large amounts of money for immediate relief, rescue and rehabilitation, followed by reconstruction of roads, bridges, power projects, drinking water systems and other public infrastructure.

Rebuilding infrastructure worth around Rs 200 billion will put additional pressure on the government’s development budget. The government may have to revise its priorities for the current and upcoming fiscal years and divert resources toward reconstruction in affected areas, reducing funds available for other development projects.

The damage extends beyond physical infrastructure, with hydropower, roads, bridges, private property and businesses bearing a large share of the losses. Restoring livelihoods and rebuilding communities will require substantial public and private investment.

The disaster has also disrupted production and supply systems. Damage to roads and bridges has affected the movement of goods, while disruption to trade with China could increase transportation costs and create supply chain problems. Higher transportation costs will eventually push up consumer prices.

Families that have lost homes, shops and productive assets will require significant support to rebuild their livelihoods. The economic impact will also extend over the longer term through job losses, business closures, lower production, power disruptions and broken road links.

The government has not allocated a separate disaster response budget in the current fiscal year. The country is now facing another major economic shock less than a year after suffering substantial losses from the Gen Z movement.

Rebuilding damaged infrastructure, resettling displaced people and restoring economic activity in affected areas have become major challenges. The sudden flood from China caused extensive damage along riverbanks in Rasuwa, Nuwakot, Dhading, Gorkha and Chitwan.

Physical Infrastructure Minister Sunil Lamsal said the initial estimate of damage to physical infrastructure alone exceeds Rs 200 billion. “The preliminary estimate puts damage to physical infrastructure at more than Rs 200 billion,” he said. “The indirect losses could be even greater.”

A major natural disaster affects the economy in two ways. It immediately puts pressure on economic growth by reducing production and trade. Reconstruction spending may stimulate the construction sector for some time, but it cannot fully compensate for lost production, jobs and assets.

More than a dozen settlements in Rasuwa, including Timure, Syafrubesi, Hakubesi and Mailung, have been devastated. Customs, immigration and police facilities, roads and hydropower infrastructure in the Rasuwagadhi Timure area have also been damaged.

Homes and other structures have been swept away in Syafrubesi and surrounding areas. In Nuwakot, the flood damaged markets and settlements including Betrabati, Mailung, Salletar, Shantibazar, Pairebesi, Khalti, Sole, Trishuli, Battar, Tupche, Dhunge and Devighat.

Around 60 houses were swept away in Trishuli Bazaar alone. Two concrete bridges over the Trishuli River were also reportedly washed away. Roads, shops and other structures in Devighat have suffered extensive damage. Infrastructure at the Trishuli and Devighat hydropower projects and a 25 MW solar plant was also damaged. More than 200 trucks that had reached Rasuwagadhi to transport goods were swept away.

Flooding caused extensive damage to private and public structures along the riverbanks in Wards 1, 4, 5 and 7 of Bidur Municipality. Roads, bridges and settlements have also been damaged along the riverbanks from the Rasuwa border to Galchhi in Dhading.

According to the disaster authority, the flood washed away 35 concrete bridges and 45 suspension bridges. Around 40 kilometres of road between Betrabati and Rasuwagadhi was also swept away.

Hydropower projects have suffered losses worth billions of rupees. The Ministry of Energy, Water Resources and Irrigation said the flood affected around 10 percent of the country’s total electricity generation capacity. Twelve power plants with a combined capacity of 431.1 MW have been shut down.

Fifteen hydropower projects under construction, with a combined capacity of 470 MW, have also suffered billions of rupees in damage. Projects with a total capacity of 901 MW have been affected.

Businesses linked to trade through the Rasuwagadhi border point have also suffered heavily. Shops, hotels, warehouses, transport operators and freight services in border markets have been damaged. Preliminary reports that hundreds of vehicles and large quantities of goods were swept away indicate significant losses for the private sector.

Damage to roads connecting Rasuwa with China and to tourist routes has also hit the tourism industry. Hotels, restaurants, transport operators and trekking businesses have suffered direct income losses.