India’s Cabinet Committee on Economic Affairs announced today it has approved investment for the generation component of the 900-MW Arun 3 hydropower project on Arun River in Sankhuwasabha district of eastern Nepal, for an estimated Rs. 5723.72 crore (US$854.4 million).
The project is expected to be completed within five years from the date of financial closure, which according to the Cabinet, is planned for September 2017.
A Cabinet press release said the project will provide surplus power to India, strengthening power availability in the country and will also strengthen economic links with Nepal.
SJVN Ltd., a joint venture between the federal government of India and the Himachal Pradesh state government, is contracted to develop the project. SJVN Ltd. is a subsidiary of Indian-owned SJVN Arun 3 Power Development Company Ltd. (SAPDC), which is based in Khandbari, Nepal.
The project will include a 70-meter-high concrete gravity dam, an 11.74-kilometer-long head race tunnel and an underground powerhouse that contains four 225-MW generating units.
According to the government of India, in March 2008, Nepal and SJVN Ltd. signed a memorandum of understanding for the project to execute a 30-year build-own-operate-transfer agreement that includes the five years scheduled for construction.
The project development agreement was signed in In November 2014. The power distribution agreement for the project, which provides 21.9% free power to Nepal for the 25-year concession period, was signed by Investment Board Nepal and SAPDC.