In recent months, India has been showing strong desire to invest in Nepal’s hydropower projects. At this time, the upper Arun also became of great interest to India.
The Government of India has also proposed to build the Upper Arun Hydropower Project by itself. If the upper Arun construction permit is granted as requested by the Government of India, it will be the fourth project in the Arun Basin funded by the Government of India. However, Nepal government is not positive about this proposal of India.
Sutlej Vidyut Nigam under the Government of India, which is constructing Arun III, has already received the construction permit for the Lower Arun Hydropower Project, while the Arun-4 Hydropower Project has been established by establishing a joint company with the Nepal Electricity Authority.It is a 1 thousand 61 megawatt project to be built in Bhotkhola Rural Municipality of Upper Arun Sankhuwasabha. According to Prime Minister and Council of Ministers Office sources, the Government of India has repeatedly written letters and demanded permission to build the Upper Arun Hydroelectric Project on the Sutlej. “It has been seen that the Indian government is trying to take all the projects of the Arun river basin by itself,” said an official of the Prime Minister’s Office,
“India also wants to build the upper Arun with its own investment, but the possibility of it being granted is low.”According to that official, India has requested to give not only the Upper Arun Hydroelectric Project but also the Kimathanka Arun Hydroelectric Project. However, Kimathanka Arun hydropower project is located in the border area of China, so it is not likely to be given, said the official. “There has been a discussion with the Ministry of Energy, Water Resources and Irrigation about whether Upper Arun can be given or not,” he said.
The Ministry of Energy has informed the Prime Minister’s Office that the Chinese government is willing to invest in Kimathanka Arun. The Ministry of Energy has warned the Prime Minister’s Office that if the project in the border area with China is given to India, geopolitical problems may also arise.
In recent months, India has been showing strong desire to invest in Nepal’s hydropower projects. At this time, the upper Arun also became of great interest to India.
Authority raising investment
While the Prime Minister’s Office is discussing India’s proposal in the Upper Arun, the Nepal Electricity Authority has finalized the investment modality of the project and has proceeded with the construction of the project. The permit for this semi-reservoir hydropower project is with the Electricity Authority. On August 30, the authority announced that it would go ahead as a model project of ‘blended financing’ (mixed investment) in the middle of a program
.The authority said that the project to be built under the leadership of Nepal Electricity Authority will include Nepal government, state government, local level of the project-affected district, project-affected district residents, common people from all over the country, subsidized loans from international multilateral development partners and loans from local banks and financial institutions. It has been decided that the Authority will own the majority of shares in the Upper Arun Hydro Electric Company established to build the project.
It is said that 70 percent of Upper Arun will be raised from debt and 30 percent from equity, which has an estimated cost of 1 billion 750 million US dollars (about 2 trillion 14 billion), including interest and price increase during the construction period.
Out of about 1 trillion 50 billion rupees, 97 billion is prepared to collect concessional loans from multilateral international development partners such as the World Bank and the European Investment Bank, and 53 billion from domestic banks and financial institutions.
The co-financing of international organizations will be led by the World Bank. Under the leadership of Hydroelectricity Investment and Development Company (HIDCL), the investment will be made through co-financing from local banks and financial institutions.
Importing hydromechanical, electromechanical and transmission line equipment of the project from abroad will cost about 30 to 40 percent of the total cost and it is expected that this amount will be paid with dollars obtained from foreign investment, which will also help in saving the country.
In the program on 30th of August, Minister Bhusal said that the pre-construction preparations of transformative projects that directly benefit the people should be completed and the construction should be carried out as soon as possible. Sushil Chandra Tiwari, Secretary of the Ministry of Energy, Water Resources and Irrigation, said that the work should be started immediately according to the schedule set for the construction of the project.
Kulman Ghising, executive director of the authority and chairman of promoter Upper Arun Hydro Electric Company, says that Upper Arun will be built in the first type of blended financing modality in Nepal. “In the co-financing led by HRADCL, the private sector banks and financial institutions of Nepal will also provide loans to the project, this will become the first type of model of blended financing, which will bring a positive movement to the economy of the country,” he said.