MoF holds discussion to raise fund for Upper Arun hydel project

Kathmandu, June 8

The Ministry of Finance (MoF) has held a discussion with the representatives of various donor agencies at Singhadurbar with the aim of raising investment for the 1061 Megawatt Upper Arun Hydroelectricity Project, termed as one of the transformative projects in the country.

The ministry discussed the issue of the semi-reservoir project with representatives of the World Bank, Asian Development Bank, Japan International Cooperation Agency, German Government, OPEC Fund, European Union, European Investment Bank, Kuwait Fund, Saudi Development Fund and other donors.

Martin Reiser, Vice President of the World Bank's South Asia Region, and Guangzhe Chen, Vice President of the Infrastructure Sector of WB, also participated in the discussion.

Finance Minister Dr. Prakash Sharan Mahat said that it is a positive sign that the World Bank has shown interest to invest in Upper Arun. "We wanted the WB investment in Arun III itself. Although it was ready to invest, due to various reasons, it pulled out from the project at the last moment," he said. "I am very happy now that there is a positive discussion about investment in Upper Arun."

Minister Dr. Mahat said that Asian Development Bank has shown interest in reservoir-based Dudhkoshi Hydropower Project, and requested the multilateral donor to speed up the investment process.

"Even now, Nepal has to import electricity from India during the dry season. That's why we need a plan with many reservoirs," he said.

The Prime Minister's visit to India has also ensured a market for 10,000 megawatts electricity produced in Nepal.

According to Dr. Mahat, the government is in the process of reducing the consumption of petroleum products while increasing the domestic market of electricity. This step could also help in reducing the growing trade deficit with India.

Minister for Energy, Water Resources and Irrigation, Shakti Bahadur Basnet, also discussed hydropower production in Nepal and its impact on the energy sector and environment.

Representatives of the development partners like the WB, ADB, JICA and Saudi Fund expressed their willingness to invest in Upper Arun project. The representative of the German government said that they are willing to invest in the transmission line based on the progress of the project.

According to the sources, the Upper Arun Hydropower Project costs about US$ 1.8 billion. Of that, there is a plan to raise 850 million from internal sources.

Most of the preparatory works for the construction of the project, such as land acquisition and tree cutting, have been completed.

The government aims to begin the construction from July 2025. 

 Published in The Rising Nepal daily on 9 June 2023.