Nepal approves Arun-3 900 MW hydropower project

Satluj Jal Vidyut Nigam (SJVN) and the Government of Nepal have signed a project development agreement (PDA) for the 900 MW Arun-3 hydropower project.

The new facilities are composed by 4 units of 225 MW power each, which are projected to generate a total of 4012 million units of electricity annually. The hydropower plant will be located on the Arun river.

The project also includes the development of a 68 m high concrete gravity dam, 149 m deep surge shaft and an underground power house. The evacuation of power will be through two 400 KV circuit of 310 km length to be connected with Indian grid at Muzaffarpur.

The project will be developed on a build, operate and transfer (BOT) basis. The contract period is 25 years after the project is operational.

The total project investment is estimated at Rs70 billion (US$1.13 billion). Financial close is expected to be achieved in one year.

SJVN was first awarded the task of executing the hydropower project under an international competitive bidding process in the year 2008 but was stalled as Nepal sought greater benefits from the project. Under the agreement the hydropower plant will supply 20% of the power generation to Nepal for free.

We have recently reported about several hydropower projects in Nepal. Last week we announced that the Government of Nepal and the World Bank (WB) have signed a$46 million loan and grant agreement for the Kabeli Hydroelectric Project.

In late October, Consortium Power Developers achieved financial closure for developing the 24.1 MW Kharekhola Hydropower Project in Nepal and in late September the Nepalese government and India’s GMR signed a PDA to develop the 900 MW Upper Karnali hydroelectric power plant in the northwest of the country.