KATHMANDU: The government of Nepal has decided to handover a lucrative Lower Arun Hydropower Project to an Indian company.
The 46th meeting of the Investment Board held at the Prime Minister’s residence in Baluwatar on Friday decided to handover the 679 MW Lower Arun Hydropower Project to Satluj Jal Vidyut Nigam Limited (SJVN) of India. The SJVN is a joint venture company registered in India where the Central Government of India and the Government of Himachal Pradesh, India have the largest shares.
A board meeting chaired by Prime Minister KP Sharma Oli decided to award the project to Satluj under the public-private partnership (build, own, operate and transfer – BOOT) model.
According to sources, India had been pushing for the project for a long time. Satluj, which is constructing 900MW Arun III project, had been lobbying for Lower Arun to Prime Minister’s Office, Ministry of Energy and Investment Board. However, the Satluj has not completed 50% work on Arun III.
The Indian side argued that the construction of the lower Arun by SJVN would be easier for them to manage the cost, import of construction materials and other technical preparations.
The Department of Electricity Development is currently conducting a detailed study of the feasibility of the project. India had proposed to build a lower Arun in keeping with all the conditions laid down in the Arun III project. The government has not disclosed the conditions under which the lower Arun will be developed.
The government had put the project in the ‘show case’ at the investment conference organized by the Investment Board recently. The Indian company Satluj had also applied for it. China was also interested in this project.
Hydroelectricity Investment and Development Company Limited (HIDCL) had sought to build the Lower Arun Project in partnership with Power China Corporation. However, the two companies have recently signed an MoU with the board for investment in the Tamor project.
Earlier, the Arun III project was handed over to the Sutluj on the competition basis. The project is being constructed with full investment of Satluj. Nepal will get 21.9 percent (197.1 MW) of electricity free of cost and the rest will be exported to India. According to the Project Development Agreement (PDA) between the Investment Board and the Indian company, the project will be transferred to Nepal after 25 years of commercial power generation. The construction period of the project has been fixed at five years.
The Indian government had proposed to build the lower Arun in the same format. The project is considered attractive as it can generate electricity from the lower Arun directly by using the water of Arun III’s tailrace. The lower Arun project falls below the power house of the Arun III project.
The Arun III project is a semi-reservoir project that can generate electricity for up to six hours daily even in the dry season when there is high demand for electricity.
Press Release (Office of the Investment Board)
