Indian cabinet approves Arun 3 investment planThe Indian cabinet on Wednesday approved an investment proposal to build the Arun 3 Hydropower Project in Nepal. A cabinet meeting held on Monday morning okayed the plan worth IRs57.32 billion submitted by SJVN Limited, an Indian central public sector enterprise.
The Indian cabinet on Wednesday approved an investment proposal to build the Arun 3 Hydropower Project in Nepal. A cabinet meeting held on Monday morning okayed the plan worth IRs57.32 billion submitted by SJVN Limited, an Indian central public sector enterprise.
“Once again demonstrating our commitment to promote clean and renewable energy in India and on the subcontinent around India, the cabinet has approved the investment proposal,” said Indian Power Minister Piyush Goyal, briefing the media about the cabinet decision.
“This is one more significant milestone in promoting and fostering better relationship with our most friendly neighbour—Nepal, both from the perspective of improving bilateral economic ties and also from the objective of making Nepal a power surplus state just like today’s India.”
Since, SJVN is a state-owned company, it needs the cabinet’s approval to make investments it Nepal. Following the approval from the Indian government, SJVN Arun-3 Power Development Company Limited (SAPDC) which is registered in Nepal as a wholly owned subsidiary of SJVN can make equity investment to build the 900 MW plant, according to Suresh Chandra Agrawal, CEO of SAPDC.
“We have already spent IRs1.57 billion on the project, and with this equity amount, we will make further investments and expedite the scheme,” said Agrawal. “We are planning to award a contract to build the dam of the hydropower plant by April, and probably to construct the powerhouse by September.”
Likewise, the developer is in the process of arranging credit to finance the project. “A handful of Indian government-owned financial institutions have already submitted expressions of interest to provide loans to the company to develop the project,” said Agrawal.
“The project’s financial closure will be done within three to four months.” It could have been completed earlier if the Nepal government had arranged the forest land required to build it, according to Agrawal.
SAPDC has acquired the private land required for the project and is currently struggling to acquire another 125 hectares of forests after the Forest Ministry told it to buy an equivalent area of land and plant trees on it.
The company refused to carry out the ministry’s instruction and wrote to Investment Board Nepal (IBN) seeking compensation invoking the ‘change in law’ clause in the project development agreement (PDA).
As per the law prevailing at the time the PDA was signed, the project developer has to pay a lease fee to the government to acquire forest lands and plant double the number of trees that are cut down.
IBN and SAPDC signed the PDA for the development of Arun 3 on November 24, 2014.
The peaking run-of-the-river type project will have a 70-metre-high concrete gravity dam and a 11.74-km-long headrace tunnel.
The project’s underground powerhouse will contain four generating units of 225 MW each. According to the PDA, the developer will give 21.9 percent of the energy generated free of cost to the government.