One of India’s Mini Ratnas, Satluj Jal Vidyut Nigam Limited (SVJN) has received approval from the Investment Board Nepal (IBN) to develop a second hydropower project in Nepal. 

In the 54th meeting headed by Nepal’s Prime Minister Pushpa Kamal Dahal held on Sunday, the IBN approved the project development agreement (PDA) draft to develop the 669-megawatt (MW) Lower Arun Hydropower project in eastern Nepal. The draft is due for approval by the Cabinet.

A 900-mw Arun-III hydroelectric project is already being developed by the state owned company and is set to complete construction by 2024. Both the projects will be based on the Arun river. IBN previously approved an investment of Rs 9,268 crore proposed by SJVN, to develop the project on April 14 during the 53rd meeting. 

SVJN is a joint-venture between the Government of India and the Government of Himachal Pradesh.  A wholly-owned subsidiary of SVJN, SJVN-Arun-III Power Development Company (SAPDC) is developing the project on a build-own-operate-transfer (BOOT) basis. 

SAPDC will run the facility for 25 years, minus the five-year building phase, before passing it to the Nepal government.

During the first 25 years of commercial operation, Nepal would get 21.9 percent of the electricity generated at the power plant as free power.

The project is located in the districts of Sankhuwasabha and Bhojpur. The Lower Arun project will have no reservoir or dam and will be a tailrace development of Arun-III, which means water will re-enter the river.

Following the 900 MW Arun-III and 695 MW Arun-IV hydroelectricity projects, this is the third project on the Arun River to be undertaken through negotiation windows. The three projects in the Sankhuwasabha district will generate around 2,300 MW of power from the river.

This is the southern neighbor’s second megaproject, following the $1.04 billion Arun-3 hydroelectric project on the Arun River.