Kathmandu — The Investment Board has decided to recommend to the government the formation of a Project Review Panel (PRP) to extend the Commercial Operation Date (COD) of the Arun-3 Hydropower Project. The 63rd meeting of the Board decided to make this recommendation in accordance with the Project Development Agreement (PDA) of the 900-megawatt capacity Arun-3 project.
The PRP will visit the Arun-3 Hydropower Project site to study and review the reasons presented for the extension request and prepare a report. According to the Board, the project has applied for an extension of the COD until September 2026, citing issues such as transmission lines and land acquisition.
The construction of Arun-3 was supposed to be completed by March 2025. However, as the work has not been completed, the company has submitted an application to the Investment Board requesting an 18-month extension of the COD. Spokesperson Pradyumna Upadhyaya stated that once the Council of Ministers forms the PRP, the Board will decide whether or not to extend the COD based solely on the PRP’s report. According to him, the PRP should consist of three expert members.
In the last week of April, during an inspection and observation visit to the project, India’s Minister of Power, Manohar Lal Khattar, stated that Arun-3 had achieved 75–80 percent physical progress in production and 30 percent in transmission line construction. The total estimated cost of the project is NPR 144 billion.
In 2008, India’s state-owned SJVN (Satluj Jal Vidyut Nigam) obtained the license for the project through a competitive process. The Project Development Agreement (PDA) for Arun-3 was signed in 2014, and the foundation stone was laid in 2018 during a ceremony held in Kathmandu by former Prime Minister KP Sharma Oli and Indian Prime Minister Narendra Modi.
According to the PDA, Nepal will receive 21.9 percent—equivalent to 197 megawatts—of electricity from the project free of cost. The project is also required to pay the Government of Nepal an energy royalty of 7 percent for the first 15 years after production begins, and 12 percent for the following 10 years.
Similarly, for the first 15 years after production begins, the project must pay the government a royalty of NPR 400 per megawatt, and NPR 1,800 per megawatt for the following 10 years. The PDA also states that the project will be handed over to the Government of Nepal 25 years after its completion. The annual energy production from the project is expected to be 4.018 billion units. Just last Friday, SJVN (Satluj Jal Vidyut Nigam), owned by the Government of India and currently constructing Arun-3, signed an agreement to sell 200 megawatts of electricity to India’s state-owned Damodar Valley Corporation (DVC).
According to Indian media reports, a Power Sale Agreement (PSA) between SJVN and DVC was signed last Friday in New Delhi, India. The reports also mention that the Arun-3 Hydropower Project is expected to come into operation by 2027/28.
Source: Kantipur
