The Investment Board Nepal (IBN) has approved the final project development agreement (PDA) draft to be signed with India's state-owned SJVN to develop the 669-megawatt (MW) Lower Arun Hydropower project in eastern Nepal. The draft is due for approval by the Cabinet.

The development comes days before Nepal’s Prime Minister Pushpa Kamal Dahal's state visit to India.

The 54th board meeting of the IBN chaired by Dahal approved the draft on Sunday, said a press statement issued by the IBN.

The SJVN has formed a local company, Lower Arun Power Development Company, in Nepal.

On April 14, the 53rd meeting of the IBN approved an investment worth Rs92.68 billion proposed by SJVN, to develop the project.

The project is located in the Sankhuwasabha and Bhojpur districts. The Lower Arun project will not have any reservoir or dam and will be a tailrace development of Arun-III, which will mean water re-enters the river for the Lower Arun project.

This is the third project undertaken, all through negotiation windows, on the Arun River after the 900 MW Arun-III and 695 MW Arun-IV hydroelectricity projects.

The three projects will generate nearly 2,300 MW of electricity from the river in Sankhuwasabha district.

The Sunday meeting also decided to notify the Power Construction Corporation of China, which has proposed to build the 756 MW Tamor Hydroelectricity Project, about its plan to move ahead with the project, as per the agreement signed on January 19, 2020.

The Tamor Hydroelectricity Project in Tehrathum and Panchthar districts is proposed to build the storage facility in a joint venture with Nepal’s Hydroelectricity Investment and Development Company. 

The report has been updated.