Nepal Approves Second Hydropower Project To Be Developed By India

The government of Nepal has decided to allow India’s Satluj Jal Vidyut Nigam (SJVN) Limited to develop a second hydropower project in the country. SJVN is currently developing a 900 MW Arun – III hydroelectric project, a run-of-river located on the Arun River in Eastern Nepal and scheduled to be completed by 2024. The newly signed Lower Arun Hydel Project is to be built upstream of the 900 MW Arun-3 hydroelectric project in the districts of Sankhuwasabha and Bhojpur. The 679 MW run-of-river project will be constructed on 25 years concession period and consists of four Francis units. Finance Minister Bishnu Prasad Paudel said that the government would extend necessary cooperation to SJVN to expedite the project development.

Nepal has already allowed the power producer NHPC to construct two projects-West, Seti and Tamor-on the Arun River, The Kathmandu Post newspaper reported. The government is also considering allowing China’s State Power Construction Corporation to build a 1,200MW project in the Upper Seti district. However, the government has been telling independent power producers that they should not incorporate Chinese components in their projects to sell electricity in India. Multiple power developers have said they received communications from the government to this effect.

The draft project development agreement (PDA) for the development of the Lower Arun Hydropower in Nepal has been approved by the Investment Board of Nepal. The board was chaired by Prime Minister Pushpa Kamal Dahal “Prachanda.” The meeting was held a few days before the Prime Minister visited India, which starts Wednesday.

Nand Lal Sharma, chairman, and managing director of SJVN, said that the company is pleased to have been granted permission to develop the project. He added that SJVN will work with the Nepal Electricity Authority to ensure the project is executed on schedule and within budget. He added that the construction of the project upstream of Arun-3 would be undertaken in joint venture mode, with SJVN holding a majority stake.

SJVN will operate the plant for 25 years after its commissioning, excluding the construction period, before handing it over to the government of Nepal. The government will receive 21.9 percent of the project’s electricity during these 25 years. In addition, the project will benefit from the government’s incentive schemes, such as the duty-free import of equipment and machinery and the foreign investment promotion policy. The project has already achieved significant progress despite the ongoing global pandemic, Mr Sharma said. He said that SJVN had implemented an acceleration plan and is committed to completing the project ahead of schedule. The company is also working to minimize delays caused by the pandemic. Mr. Sharma added that the company is happy to be in Nepal and looks forward to continuing its business. He also congratulated the government of Nepal for its efforts in making the country a vibrant, prosperous, and safe place for business and tourism.

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