The government of India has again expressed interest to construct the Lower Arun hydropower project with capacity to generate 400 megawatts of energy.

In a meeting with Minister for Energy, Water Resources and Irrigation Barshaman Pun in the Capital on Thursday, Indian Minister of State for Power, RK Singh put forth a proposal that the new project can be developed adopting the same model of 900-MW Arun III Project.

The Indian government had earlier proposed to build the project when Minister Pun had visited India in February.

Singh mentioned that India has put forth the proposal to build Lower Arun as per all conditions set in Arun III. 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.

As per officials from the energy ministry, the Indian government has submitted a proposal to develop Lower Arun, which will be constructed in Sankhuwasabha district. “Nepal has said that further discussions on Lower Arun will be based on the work progress of Arun III,” the officials said.

As per project officials, 25 per cent of construction work of 900-megawatt Arun III hydroelectric project has been completed till date.

The energy minister had previously scrapped the licence granted to a Brazilian company ‘Brass Power’ for construction of Lower Arun Project as per the directive from the Commission for the Investigation of Abuse of Authority (CIAA). The company had failed to make any progress in the project in the 15 years duration after the licence was awarded to it.

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.

At present, the Department of Electricity Development is carrying out the
feasibility and detailed study of the project.