Kathmandu, February 15

The Investment Board Nepal (IBN) has sought proposals from the three selected firms to construct the 400-megawatt Lower Arun Hydropower Project.

The IBN had earlier shortlisted joint-venture company of Hydroelectricity Investment and Development Company (HIDC) and Power Construction of China Ltd (Power China); Satluj Jal Vidyut Nigam (SJVN) of India; and joint venture of Green Resources Ltd and Electrical Power Development Company to develop the Lower Arun Hydropower Project.

Similar to the Arun III hydel project, which will provide 21 per cent free power to Nepal during the concession period, the developer of the Lower Arun hydel project should also prioritise providing certain per cent of power free of cost, as per IBN.

Similarly, IBN has stated that the developer of the Lower Arun project, which is located in Sankhuwasabha and Bhojpur districts, must ensure that the length of the main tunnel is 15 km. The project cost for Lower Arun is estimated at over Rs 100 billion. As per the initial study conducted by Brass Power, the installed capacity of the project can be enhanced to around 1,000 MW if it is developed as a storage-type project.

IBN officials said that the project will be awarded to one of these three firms based on their proposals.

Earlier in September, India had expressed interest to construct the Lower Arun Hydropower Project. Indian Minister of State for Power, RK Singh, had put forth a proposal that the Lower Arun project can be developed by adopting the same model of 900-MW Arun III project.

As per the agreement on Arun III, apart from shares being allocated to the locals and free energy to the affected areas, the government will get Rs 330 billion as royalty over a period of 20

years and the project will also provide 21.9 per cent of the generated energy free of cost to Nepal. The developer will hand over the ownership of the project to the government of Nepal after 20 years of commercial operation.