Global financial institutions 'ignored' climate warnings in Nepal’s hydropower disaster: SANDRP probe

Counterview News 

A catastrophic flood disaster across Nepal’s Himalayan river valleys has triggered urgent international scrutiny over the role of multilateral lenders and development finance institutions. According to an extensive investigation published by the South Asia Network on Dams, Rivers and People (SANDRP), international financiers—including the World Bank Group’s International Finance Corporation (IFC), the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), and the Export-Import Bank of China—pushed forward major hydropower projects in disaster-prone valleys despite documented warnings, recurring historical floods, and unheeded safety recommendations.

The disaster has extracted a staggering human toll, which escalated dramatically after project developers belatedly submitted workforce records. As the authors observe, "On the 28th August 2026, Nepali officials roughly doubled their tally of missing people to over 1,900, saying hydropower producers had only recently shared a count of unaccounted-for workers at projects in the devastated river valleys. It is feared that over 900 people are missing from hydropower projects." 

Hundreds of laborers, engineers, and local residents—including a significant number of migrant workers from India—were trapped inside underground tunnels and powerhouse excavations at major facilities such as the 216 MW Upper Trishuli-1 and the 60 MW Upper Trishuli-3A. Although the Nepal Army successfully executed "valiant efforts" to pull over 350 survivors to safety, many remain unaccounted for beneath debris and floodwaters.

​The Trishuli Basin, which hosts a dense cascade of more than 36 hydropower installations, sustained widespread structural destruction. Upper Trishuli-1, a $647.4 million project that was nearly 84 percent complete and represented "one of the largest foreign direct investments in Nepal's history," was severely battered by the transboundary deluge, leaving it "all but destroyed by the sheer force and fury of the Himalayan floods." 

Neighboring operational plants, including Rasuwagadhi, Chilime, Sanjen Khola, and Langtang Khola, suffered severe powerhouse flooding, damaged intake structures, and severed grid links, knocking substantial generating capacity offline nationwide.

​SANDRP researchers Parineeta Dandekar and Himanshu Thakkar argue that this tragedy was not entirely unforeseeable, pointing out that "Multilateral Development Banks including the ADB and World Bank Group's IFC, that financed and championed the Upper Trishuli-1 hydropower project and conducted a Cumulative Impact Assessment of Trishuli Basin were acutely aware of the extreme danger to which they were exposing thousands of laborers, officials, residents, rivers, infrastructure and landscape." 

The authors note that the lenders' "own reports repeatedly highlighted it. But they did not take any preventive steps, did not demand stringent checks and balances, nor were they prepared for a calamity they knew could occur," adding that capital continued to flow under the dubious premise that "Funding was sought and provided in the garb of 'Climate and Disaster Resilience'."

​Reports from the project's own Independent Panel of Experts (IPoE) consistently raised unaddressed red flags. In June 2025, the panel noted: "IPoE had recommended the preparation of a Climate Resilience Assessment for the Project. This assessment has yet to be done. Following the September 2024 event, which showed that combinations of climatic and geological events can have severe consequences, we recommend expanding the scope of such climate resilience assessment to disaster risks." 

The panel also repeatedly sounded the alarm that "The slow implementation of a reliable early flood warning system, as discussed in the Environmental section of this report, remains a major risk to those project communities in proximity to the river, especially Mailung and Gumchet." 

The December 2024 IPoE report further exposed erratic risk modeling after an event that washed out worker housing, remarking that "The Owner's Engineer estimates the return period of the September 28th flood to 4 years, while the EPC's main subcontractor estimates it to 10 000 years (!)" 

Even after a subsequent July 2025 flood rendered ten regional projects defunct, international funding flowed uninterrupted without mandated transboundary risk assessments or robust early warning infrastructure.

​The IFC has faced parallel criticism regarding its 2020 Cumulative Impact Assessment for the Trishuli Basin, which SANDRP says "had the opportunity and space to address cumulative disasters, GLOFs, transboundary impacts, Compound disasters, growing footprint of a changing climate. It did nothing." The report highlights that "While not discussing cumulative threats of GLOFs and flood disasters, it did not even attempt to look at the upstream and assess Tibetan impacts. It made no cumulative disaster plan for a basin littered with hydropower projects." 

Similarly, bilateral projects such as Upper Trishuli-3A, financed by a $149 million concessional loan from China's Exim Bank, were built by contractors that "have no independent, binding environmental safeguards and rely on Host Country rules or voluntary action at best," despite traversing one of the most fragile transboundary corridors in Asia.

​The devastation along the Trishuli River forms part of a broader, lethal trend across the fragile mountain belt, coming on the heels of fatal accidents at India's Vishnugad Pipalkoti project, Sikkim's Teesta VI, and the 2023 Teesta III collapse. 

In light of these recurring disasters, the report emphasizes: "Multilateral Development Banks, International Climate Funds, International Finance Corporations need to appreciate the 'International' nature of trans-boundary disasters and growing climate risks. It is high time international finance bodies like ADB, IFC, AIIB, Chinese Exim Bank etc., accept their role in putting people and ecosystems at risk. The migrant labors working on hydropower projects in Himalayas are some of the most tragically vulnerable sections of our society." 

With Himalayan rivers enduring catastrophe after catastrophe, the investigation concludes with the urgent hope that this disaster will serve as a decisive watershed moment for regional accountability and environmental protection.

Meanwhile, The New York Times  in a report titled "Nepal’s Hydropower Industry Was Booming. Now 900 Workers Are Missing", quoted Dinesh Paudel, a geographer at Appalachian State University who studies development in Nepal, as saying Nepal's hydropower sector expanded rapidly over the past decade despite the region's vulnerability to earthquakes, floods and landslides, attributing this growth to the area's abundant river water and its closeness to China. It added, "The river has all the ingredients."