The 900-MW export-oriented project project, which is the largest hydro project as of now, located on the Arun River in the Sankhuwasabha district is being developed by India’s Satluj Jal Vidyut Nigam (SJVN) through its wholly owned subsidiary SJVN Arun-3 Power Development Company.

The construction of the estimated Rs 104 billion power plant started on May 12, 2018. On Thursday, five Indian and two Nepali commercial banks agreed to invest Rs 101.35 billion in the project that is expected to generate power by 2023.

As per the agreement, the consortium of State Bank of India, Punjab National Bank, Export-Import Bank of India, Union Bank of India and Canara Bank will inject Rs 86 billion, while two Nepali commercial banks Everest and Nabil will put Rs 15.35 billion in the project.

The project developer and the banks reached the agreement in Kathmandu on Thursday. The meeting of Nepal Investment Board on Wednesday had approved the project financial management proposal submitted by the developer.

The project, originally, was slated to start producing energy by 2020, but that did not happen due to the delay in the financial closure deadline by the project developer. As of now, the project has achieved 30 percent of physical progress, according to the project officials.

The output from the power plant will be transferred to the Nepal-India border via a 217-km-long 400-kV double circuit transmission line, which will be routed along Diding to Dhalkebar towards Muzaffarpur in India.

The estimated cost of erecting 501 towers for the power line that will be connected to the Dhalkebar-Muzaffarpur transmission line is Rs 19.77 billion.

Nepal will receive Rs 348 billion over 25 years from the project. The project developer will also provide 21.9 percent of the energy free of cost, which is worth Rs 155 billion, plus another Rs 107 billion in royalties.

The Arun-3 hydropower project will include the construction of a 70m-tall and 466m-long concrete gravity dam on the Arun River. SJVN received the allocation to develop the project on a build-own-operate-transfer basis, for a period of 25 years, in March 2008.

SJVN and the government of Nepal signed a memorandum of understanding for execution of Arun-3 on March 2, 2008. A total of 269 project affected families will be 30 units each of electricity for free every month and the project will generate 3,000 jobs, the Investment Board officials said.