Kathmandu, December 31

With the completion of nearly 30 per cent of construction work of India-backed 900-megawatt Arun-III hydroelectric project, the developer company is scheduled to ink the financial closure of the project by February.

Hareram Subedi, residential representative of SJVN Arun-III Power Development Company, informed that the company has almost finalised the necessary documents for the financial closure. “We have already forwarded the necessary documents to Investment Board Nepal (IBN) for its final approval. After we get a goahead, we will ink the financial closure with IBN by February.”

SJVN is a subsidiary company of Satluj Jal Vidyut Nigam Ltd, India, which has been tasked with building the project.

As per him, IBN has said that they are holding consultations with Nepal Rastra Bank before granting the approval.

“IBN officials have said they will complete the necessary approval work by the end of January and finalise a mutually convenient date for the financial closure.”

Subedi informed that the project has achieved 30 per cent progress in physical work and 11 per cent in financial work till date.

“At present, we are executing the construction work through our equity investment, which is worth Rs 27 billion. After our equity investment crosses at least 50 per cent, we will ink the financial closure with different banks and financial institutions, including two Nepali banks.”

Arun-III is an export-based project, which will bring the largest-ever government-to-government level foreign direct investment (FDI) from India worth $1.2 billion.

He informed that Everest Bank has pledged to invest Rs 10.5 billion and Nabil Bank has committed to invest Rs five billion in the project.

The company has said they have accelerated the civil, hydromechanical and electromechanical works simultaneously.

The company had awarded the aforementioned works to an Indian firm called JP Construction, which has already started executing the construction work. “We plan to start construction of transmission line by the beginning of March, for which the process of awarding the tender has been finalised,” he informed.

Earlier, the government had expressed commitment to facilitate the firm in case it faced any problems related to construction of the project.

IBN and SJVN had inked a pact in November of 2014 for the power development agreement of Arun-III hydropower project. The project was supposed to start generating energy by 2020 as per the earlier agreement.

However, IBN and SJVN reached an agreement later to complete the construction of the project by 2023.

Subedi said that there has been noticeable momentum in major works of the hydropower project, such as construction of headrace tunnel, audit tunnel and powerhouse, among others.

Apart from shares being allocated to the locals and free energy to the affected areas, the government will get Rs 330 billion as royalty in a period of 20 years and the project will also provide 21.9 per cent of the generated energy free of cost.

The project will generate 400 million units of power every year.

As per the agreement with IBN, the developer will hand over the ownership of the project to the government of Nepal after 20 years of commercial operation.