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Kathmandu: The Investment Board has decided to issue the license for the Lower Arun Hydropower Project to an Indian company only after consulting the Nepal Rastra Bank (NRB). The board meeting, chaired by Prime Minister KP Sharma Oli on Friday, concluded that since the project involves foreign exchange transactions, consultation with the central bank was necessary before granting approval, spokesperson Pradyumna Prasad Upadhyaya said.

According to him, the decision on the license will be taken in the board’s next meeting after receiving Rastra Bank’s opinion.

India’s SJVN Lower Arun Power Development Company has been seeking a license for the 669 MW semi-reservoir project for the past six months. As per its Detailed Project Report (DPR), the project will cost NPR 76.74 billion (INR 47.96 billion).

Once completed, the project will generate 2.9 billion units of electricity annually. The per-MW construction cost is estimated at NPR 114.7 million, which makes it relatively cost-efficient. The project is expected to be completed within five years. Since water released from the under-construction 900 MW Arun III project will be directly diverted into the Lower Arun tunnel, no additional dam is required. Arun III, also being built by SJVN, is already over 80 percent complete.

In May 2023, the Investment Board and SJVN signed the Project Development Agreement in New Delhi in the presence of then Prime Minister Pushpa Kamal Dahal and Indian Prime Minister Narendra Modi.

According to SJVN, Arun III will operate in a tandem modality, tapping water through a headpond with a length of 66.4 meters, width of 29.5 meters, and height of 28 meters. From there, water will flow into a 17.4 km long headrace tunnel with a 10.5-meter diameter.

Power from the project will be evacuated through a 400 kV transmission line, connected via a 2 km loop-in loop-out line to the 400 kV Dhalkebar substation. The same transmission line will carry electricity from both Arun III and Lower Arun to India.

The Lower Arun project spreads across Sankhuwasabha’s Chichila, Silichong, and Khandbari, and Bhojpur’s Salpasilichong and Shadananda municipalities.

Nepal will receive 338 MW of free electricity from the two projects combined. Of this, SJVN has committed to provide 21 percent of Lower Arun’s electricity free of cost, which amounts to about 140 MW. From Arun III, Nepal will get 198 MW free electricity.

SJVN had won Arun III in 2008 after offering 21.9 percent free power to Nepal. The Investment Board had also prioritized free power when it called for proposals for the Lower Arun project.

People’s News Monitoring Service