Nepal has requested the World Bank (WB) to take forward the financial management of the Upper Arun Hydroelectric Project citing the delay in the construction of the project which was supposed to start in April.

In a meeting with the WB’s representatives on Tuesday, Energy Minister Deepak Khadka requested the international lending institution to conclude the financial closure as soon as possible. According to the Ministry of Energy, Water Resources and Irrigation, the WB has expressed its keenness to finalize the financial management provided the government comes up with its commitment to solve the issues that might emerge during the project construction.

The government has sought the WB’s initiatives in line at a time the 1,063.36 MW project has witnessed a delay in its construction. While the government has planned to build the project, Indian Company Sutlej Jalvidyut Nigam has been putting pressure at the political and diplomatic level to grab the contract for the mega hydropower project proposed to be built in Bhot-khola Rural Municipality of Sankhuwasabha.

Nepal Electricity Authority (NEA) through a subsidiary company ‘Upper Arun Hydro-Electric Limited has started a study on various aspects of the project. On the other hand, the Indian company is insisting on getting the contract for all the projects based in the Arun basin including 900 MW Arun III project and 210-km long transmission line in the region.

Earlier, India had urged the WB to reconsider its involvement in the project due to ongoing Indian-led projects downstream of the Arun River. In response, the WB in the last week of October replied to India stating that no loan agreement has been finalized, and the project is still under review.

Upper Arun is a game changer project of Nepal which is expected to operate at full capacity for six hours a day during the six months of winter when there is a high demand for electricity. The project that will produce around 4.53 billion units of electricity annually is estimated to cost US $2.24 billion.

On April 12, the government and the WB agreed to expedite the project construction work as soon as possible. To this end, Upper Arun Hydro-Electric Limited has been working to start construction of the project from the beginning of 2026.