The country’s main power backup plant has been continuously producing electricity since the last three and half decades.

Kulekhani Hydroelectricity Project is the country's only reservoir-based power project so far. The two operational projects (60 MW Kulekhani I and 32 MW Kulekhani II) are supported by the Kulekhani Dam, which is a rock-fill dam on the Kulekhani River near Kulekhani in Makwanpur district of Narayani zone. The 114 m (374 ft) tall dam creates a reservoir called Indra Sarobar which can store a maximum of 85,300,000 cubic metre of water. 

The construction of the dam began in 1977 and Kulekhani I was commissioned on December 8, 1982. The US$117.84 million project received funding from the World Bank, Kuwait Fund, UNDP, Japan's Overseas Economic Cooperation Fund (OECF) and OPEC Fund. It is owned by Nepal Electricity Authority (NEA).

Kulekhani I
From the reservoir, water is sent to the Kulekhani I Hydropower Station located at Dhorsing of Makwanpur via a 5.8 km headrace tunnel to a gate house which controls the flow of water to the power station. From the gate house water travels down a 1,340 m (4,400 ft) long penstock and reaches the underground power station which contains two 30 MW Pelton turbine-generators. The difference in elevation between the reservoir and the power station affords a net hydraulic head of 550 m (1,800 ft).

Kulekhani II
Kulekhani-II Hydropower Station, located at Nibuwatar, Makwanpur, is a cascade of Kulekhani-I with installed capacity of 32 MW and annual design generation of 104.6 GWh. It was commissioned in 1986 and developed with assistance from OECF Japan and the Government of Nepal at a cost of Rs 124 million.

The Plant has faithfully cascaded the generation of Kulekhani-I while also boosted with water intake from Mandu and Rapti pumping. Every year Mandu intake is cleaned after the wet season to allow the filtered water to the intake pond. Survey was carried out to explore the possibility of addition of Mandu and Rapti in an extensive scale such that one unit could run while Kulekhani-I is not operated for storage of water.

Water discharged from the power station of Kulekhani I then enters a series of tunnels and diversions where it reaches the Kulekhani II Hydropower Station which is also located underground and contains two 16 MW Francis turbine-generators. The elevation difference between the reservoir and the power station affords a net hydraulic head of 284.1 m (932 ft). The dam and reservoir are in the Bagmati River basin while the power stations are in the Rapti River basin. 

Kulekhani III
Construction of the Kulekhani III Hydropower Station has been underway since 2008 and is expected to be complete in August 2017. It will use the tailwaters of Kulekhani II and have an installed capacity of 14 MW, according to NEA.

Benefits to the locals
Villages around Kulekhani were supplied with electricity in the late 1970s when even the major cities of the country did not have electricity. However, due to the lack of other development activities, the Kulekhani locals have been using the electricity only for lighting their houses. Of late, some small hotels and industries have opened in the area. They, too, use the electricity from the Kulekhani projects.

A major impact that the projects have made locally is employment generation. A number of locals were employed by the project when it was being developed. When the project was handed over to the NEA after completion, most of these workers were made the employees of NEA. This has helped improve the economic condition of hundreds of local households.

Supporting Tourism
Of late, Kulekhani has emerged as a tourist destination, especially for domestic tourists. The Indra Sarobar has become a major source of attraction for these domestic tourists. Youths, especially those from the Kathmandu Valley, go hiking on the hills surrounding Kulekhani which is only 21 kilometers away from the capital. Similarly, some youths reach there on their bikes. Chandragiri Cable car service which started operating some 10 months ago has increased the tourism activities in Kulekhani. The Indra Sarobar which is surrounded by lush green hills is the main tourist attraction in the area. Visitors can enjoy boating in Indra Sarobar and also get to eat fresh fish items.