Nepal and India on Monday signed six memorandums of understanding during the day-long visit of Indian Prime Minister Narendra Modi to Lumbini.

Among others, Nepal and India have agreed to jointly develop the Arun-IV hydroelectricity project in Sankhuwasabha. The project will be jointly developed by Nepal Electricity Authority (NEA), government of India and Sutlej Jala Vidyut Nigam (SJVN), a subsidiary of Himachal government.

Kulman Ghising, managing director of NEA and Nandalal Sharma, chairman of SJVN, signed the agreement.

The total installed capacity of the project, which was earlier 490.2 megawatts, now will be 695 megawatts. Nepal will receive 21.9 percent, or 152 megawatts, of electricity free, as per the agreement.

The project site is located on the lower side of the Arun-III hydroelectric project which is also currently being developed by India’s SJVN. Both NEA and SJVN will form a joint company to develop the project. SJVN and NEA will have 51 percent and 49 percent stakes, respectively, in the total investment of the project.

The estimated cost of the project is Rs79.12 billion.

Nepal’s Ministry of Foreign Affairs informed about the signing of six pacts after the bilateral talks between Prime Minister Sher Bahadur Deuba and his Indian counterpart Modi.

The two prime ministers recalled their fruitful discussions during the official visit of Deuba to India on April 1-3, said Nepal’s foreign ministry, adding that during the bilateral talks, the two prime ministers had a broad overview of Nepal-India cooperation and matters of mutual interests with a view to further enhancing the close and cordial ties between the two countries.

The two sides also agreed in principle to establish the sister city relations between Lumbini, the birthplace of Buddha, and Kushinagar, where Buddha passed away.

Necessary steps will be taken in due course through appropriate local authorities, said Nepal’s foreign ministry.

After the meeting, Prime Minister Deuba hosted a luncheon in honour of Modi and the Indian delegation.

Modi arrived in Lumbini earlier on Monday at around 10:40am from Kushinagar.