The physical progress on the power generation side of the under-construction 900-megawatt Arun–3 Hydropower Project in Sankhuwasabha has reached 74.61 percent. The project’s financial progress stands at 74.6 percent, according to the Investment Board.

Under the project, the 400 kV cross-border transmission line extending to Sitamarhi, India, has achieved 58.3 percent physical progress. As the work could not be completed within the stipulated time, the developer - SJVN Arun–3 Power Development Company (SAPDC), a subsidiary of the Indian government-owned company Satluj Jal Vidyut Nigam (SJVN) - has applied for an extension of the project’s Commercial Operation Date (COD) until September 2026.

The project, whose construction began in 2018/19, was targeted for completion within five years. According to the agreement, construction was supposed to be completed by March 2025, but as the work could not be finished within the stipulated time, the company has moved forward with the process of extending the Commercial Operation Date (COD).

A Project Review Panel (PRP) has been formed to decide on the extension of the COD. The Investment Board stated that the decision on whether to extend the COD will be made solely on the basis of the PRP’s report.

The project’s dam is located in wards no. 3 and 5 of Makalu Rural Municipality, while the powerhouse is situated in ward no. 3 of Chichila Rural Municipality. The powerhouse will be equipped with four turbines, each with a capacity of 225 megawatts.

The peaking duration (hours of operation at full capacity) of the electricity generated by the project is 3.40 hours per day. Prior to construction, the land acquired for the project included 125 hectares of public land and 50 hectares of private land.

PDA between the Government of Nepal and SJVN

A Memorandum of Understanding (MoU) related to project development was signed between the Government of Nepal and SJVN in 2008. Subsequently, a Project Development Agreement (PDA) between the government and SJVN for the development of the project was signed in 2014.

During the Nepal visit of Indian Prime Minister Narendra Modi, on May 11, 2018, the then Prime Minister KP Sharma Oli and Indian Prime Minister Narendra Modi jointly inaugurated the project from Kathmandu itself.

With a target of completing the project within five years, the construction contract was awarded to the Indian public sector company Satluj Jal Vidyut Nigam Limited (SJVN). Satluj had received the survey license through global bidding in 2009/10. The contractor company has established Arun–3 Power Development Company (SAPDC) to implement the project.

According to the agreement, Nepal will receive 21.9 percent of the electricity produced - equivalent to 197 megawatts - free of cost. The remaining electricity will be exported to India.

Similarly, after 25 years from the start of power generation, the project will be handed over to Nepal. Until then, the agreement stipulates that Nepal will receive an annual benefit of NPR 13.92 billion through free electricity, royalties, and other taxes.

Urjasanchar