The 900MW Arun – III hydropower project, which will be built on Nepal’s Arun river, is expected to start electricity generation from 2021.
Nepal Law Minister Narahari Acharya told Reuters, "We have passed the Arun III agreement. It will be signed this week with the Indian company."
SJVN signed a memorandum of understanding (MOU) with the Government of Nepal in 2008 for the Arun – III HE project, which is located in the Sankhuwasabha district, 657km from Kathmandu.
The project was not implemented even after signing of MOU as Kathmandu desired for higher benefits.
Apart from taking ownership of the project, Nepal will earn $3.48bn in royalty, income and taxes from the power plant for a period of more than 25 years.
SJVN will deliver about 22% of the power generated from the project to the Nepal government for free of charge.
Nepal currently generates 800MW of hydropower, which is much less than the required 1,400MW, even though the country has the potential to produce 42,000MW of capacity.
The Indian companies are considering investing in Nepal’s hydropower projects as part of an electricity trading pact signed between the two nations in October 2014.
