Nepal has renewed its approval to the 900 MW Arun-3 hydropower project on the Arun river and will sign a bilateral agreement with India for the US$1,040m project. The project, developed by Satluj Jal Vidyut Nigam (SJVN), was initially approved in 2008 but was stalled as Nepal sought greater benefits from the project. Under the new agreement, SJVN will develop the project under a 25-year Build-Operate-Transfer (BOT) scheme and supply 20% of the power generation to Nepal for free; the remaining 80% will be exported to India. Nepal will earn US$3.48bn over 25 years in royalties, income and taxes and take over the plant after 25 years.
Indian companies are planning to develop up to 8,250 MW of power plants in Nepal and up to US$7bn could be invested in the Nepalese hydropower sector in the next five years. Nepal has less than 800 MW of installed hydropower capacity (about 740 MW in 2013) but has a significant hydropower potential, estimated at 42 GW.
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