The Nepal government and the local communities must cooperate with the project so that it can be completed within 60 months

The Indian government has approved a financial arrangement for the construction of 900-MW Arun III hydroelectric project in Sankhuwasabha district which is being developed by Indian state-owned Satluj Jal Vidyut Nigam Ltd (SJVNL). The cabinet committee on economic affairs chaired by PM Narendra Modi has approved the investment for the generation component of the project. The Indian government will provide INR 57.24 billion or (Rs. 92 billion) to SJVNL. An estimated Rs.112 billion will be spent for construction of the project. SJVNL will mobilize the rest of the financing through banking channels. SJVNL had bagged the project through competitive international bidding, and a Memorandum of Understanding (MoU) was signed in March 2008. As per the MoU reached between the government of Nepal and SJVNL the project will be built on the Build, Own, Operate and Transfer (BOOT) model and run for 25 years from the date of generation of energy, and the project will have to hand it over to the Nepal government on good condition. As per the agreement, Nepal will receive 21.9 percent of electricity – around 197-MW – free of cost; Rs. 150 billion as royalty and Rs. 77 billion as income tax. However, Nepal government will have to provide Rs.4.50 billion to the project developer in terms of VAT exemption at the rate of Rs. five million per megawatt of electricity.

The project will also have to invest an additional Rs. 40 billion to build a 210-KM long and 1,800-MW capacity transmission line to wheel the energy in India. SJVNL which has established a subsidiary company in Nepal is expected to mobilize the rest of the resources by coming September. The Investment Board Nepal and SJVNL had signed the Project Development Agreement in November 2014 giving two years’ time for financial closure of the peaking run-of-the-river project. However, the IBN had given the developer 10 months’ additional time to conclude the financial closure. The SJVNL has already paid most of the land compensation to the project affected people and has already constructed a 28-KM access road. The Nepal government has also expedited the process of clearing the forest area falling under the project area.

The project will provide surplus power to India strengthening power availability in Nepal and will also strengthen economic ties with Nepal. The Indian government’s decision to provide a huge chunk of budget to SJVNL is a welcome step as both the countries have already reached the Power Trade Agreement (PTA), built the cross-border transmission lines and have already started exchanging power between the two sides. On the other hand, the free energy that Nepal will receive from SJVNL will help reduce power cuts in Nepal and will also help electrification in eastern Nepal. With SJVNL getting financial support from the Indian government, construction of Arun III is expected to kick start immediately. The project is expected to provide jobs to around 3000 people from both the countries for five years, and it will also help uplift the socio-economic condition of the eastern hills. The Nepal government and the local communities must cooperate with the project so that it can be completed within 60 months as the country is set to benefit from Arun III initiated by it 21 years ago.

Gold smuggling

Of late, reports are pouring in about smugglers being nabbed with gold. This is indeed a disturbing trend and possibly more gold is being smuggled into the country. The arrests made might be just the tip of the iceberg. Smuggling of gold seems to be on the rise. Gold is smuggled from China to Nepal via Tatopani border of Sindhupalchowk, Rasuwa and Tribhuvan International Airport (TIA). This rise in the number of gold smuggling cases can be mainly attributed to the open border with India. Smuggled gold enters India through Nepal. The poor law enforcement agencies on both sides are to be largely blamed.

What is very worrying is that even high-ranking government officials and also the police are found working in tandem with the smugglers. Many customs officials are also involved in assisting the smugglers and allowing the gold to enter. This scale of smuggling would not be possible without their involvement. As such, strict action should be taken against the corrupt officials. Also sterner measures should be taken in order to deal with those involved in this illegal activity.