Nepal | September 29, 2020

‘Construction of Arun-3 could begin in January’

Himalayan News Service
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Kathmandu, June 27

The construction works of 900-megawatt Arun-3 hydroelectric project can begin as early as January if the government hands over adequate plots of land on time, the project developer has said.

As per the project development agreement (PDA) signed between the government and the project developer in November 2014, the government had to acquire 82.13 hectares of private land and 98.19 hectares of public land on behalf of the project developer. The private land should have been handed over to the project developer within a year of signing the PDA and public land should have been transferred within 21 months of signing the PDA.

But even after 19 months of signing the agreement, the government has not been able to complete this process due to legal provision on land ownership ceiling of 75 ropanies (3.8 hectares) fixed by the state.

Recently, the Ministry of Land Reform and Management has decided to allow Arun-3 project developer to own land beyond the ceiling of 75 ropanies, but the process of handing over the plots is yet to begin.

“If the land pledged by the government is transferred as soon as possible, the project developer has said it could begin construction works at dam site in Faksinda Dovan and Num village area in January or February of 2017 and at power house site in July 2017,” says a report prepared by a sub-committee formed under the Parliamentary Committee on Agriculture and Water Resources.

Arun-3 hydroelectric project is being built by India’s state-owned Satluj Jal Vidyut Nigam (SJVN) in Sankhuwasabha district under build, own, operate and transfer (BOOT) model of 25 years. The peaking-type export-oriented project, which will cost around Rs 104 billion to build, can generate 3.7 billion units of electricity per year once it begins commercial operation in 2021.

The project developer has agreed to extend 21.9 per cent of the electricity generated by the project, or 197 MW, free of cost to the government. The cost of this electricity in 25-year concessional period is expected to be worth around Rs 155 billion.

Also, the government is expected to earn Rs 107 billion in royalty, Rs 77 billion in income tax and Rs nine billion in customs duty and value added tax from the project during the 25-year concessional period. In addition, free shares worth Rs 1.6 billion will be extended to locals residing in areas that are expected to be affected by the project.

“The project will also generate around 3,000 job opportunities and high priority will be given to local youths during the time of recruitment. Besides, demand for construction materials, such as cement, steel and corrugated sheets, that is expected to be created by the project is expected to pave the way for establishment of manufacturing units that produce these goods,” says the report submitted today by sub-committee coordinator Amrit Kumar Bohara to committee Chairman Gagan Thapa.

Despite these benefits, the project has not moved forward because of delay in handing over of the land.

“Because of this delay, the project developer has not been able to build access roads to begin construction of dam and tunnels,” says the report.

As per the PDA, the government had to provide land to build access roads to reach the sites where power house and dam are being created within six months of the signing the agreement.

“But the land has not been provided till date. If the government fails to hand over the land on time, the construction will be delayed. This will raise the spectre of the government turning into a defaulter, which will not serve Nepal’s interest,” says the report, adding, “If the government can fulfil its promise at the earliest, we will have an upper hand in exerting pressure on the project developer to complete the project on time.”

A version of this article appears in print on June 28, 2016 of The Himalayan Times.

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