The land acquisition process for the Arun III Hydropower Project has hit a fresh snag after landowners and the project’s compensation determination committee failed to agree on the compensation amount during the first round of negotiations held last week.

The project developer needs to make compensation payments to the owners of 49 hectares of land required for the 900 MW project located in eastern Nepal.

Locals who will have to relocate for the hydroelectric scheme have demanded Rs2 to Rs2.5 million per ropani (around 508 square metres), a source at Investment Board Nepal (IBN) said. “It was an unreasonably high price.”

The negotiation committee was led by the chief district officer of Sankhuwasabha district.

“But locals have agreed to start the second round of negotiations showing some flexibility over the rate,” the source said. The committee, however, has not revealed

how much it is prepared to pay. “It has only listened to the demands of the locals.”

Although residents have agreed to be more accommodating, it is quite unlikely that a deal will be concluded soon. SJVN Arun III, the project developer, is in no mood to pay anywhere near what they are demanding, said the source.

“The developer is not likely to offer more than Rs700,000 per ropani,” said the IBN source. Due to the differences over compensation, it seems that negotiations will stretch a few weeks longer.    

The latest issue could prove a headache for SJVN Arun III as

land acquisition is one of the

key preconditions for financial closure. According to the Project Development Agreement (PDA) signed with the government, it has to complete financial closure by November 2016.

There are 391 private land parcels, including 112 in Diding, 82 in Yaphu, 147 in Num and 50 in Pathivara VDCs. The project will also be acquiring the houses, cowsheds, huts and plants standing on those land plots. IBN, SJVN and locals of Sankhuwasabha signed a tripartite agreement on the resettlement plan in February.

The resettlement plan complies with the Asian Development Bank’s ‘safeguard standard’ policy, and the affected people will be compensated as per the international relocation and resettlement standard.

As per the accord signed between IBN and SJVN in November 2014, the developer will complete the construction of the plant and start energy generation by 2020.

According to IBN, Nepal will receive Rs348 billion over 25 years from the project. SJVN will provide 21.9 percent of the energy generated free of cost, which is worth

Rs155 billion, plus another Rs107 billion in royalties.