KATHMANDU: The Indian government has greenlit an investment of nearly NPR 100 billion in Nepal’s hydropower sector, significantly boosting bilateral energy cooperation. Indian company Satluj Jal Vidyut Nigam (SJVN) Limited has secured approval for an investment of NPR 92.67 billion to construct the 900 MW Arun-3 and 669 MW Lower Arun hydropower projects.
The decision came from a cabinet meeting chaired by Indian Prime Minister Narendra Modi, which approved INR 57.92 billion for these projects. The substantial investment underscores India’s commitment to enhancing Nepal’s hydropower infrastructure.
SJVN, an Indian government-owned company, is already in the process of building the 900 MW Arun-3 hydropower project. Additionally, the company has acquired rights for the 669 MW Lower Arun and 490 MW Arun-4 hydropower projects, all of which are run-of-the-river types.
The approval of these projects reflects the ongoing collaboration between India and Nepal in the energy sector. However, the allocation of the Upper Arun project remains a contentious issue. India has been consistently pressuring that the 1,063 MW Upper Arun project should not be awarded to any other promoters, emphasizing its strategic interest in the region.
Nepal’s recent move to develop the semi-reservoir Upper Arun project using a World Bank loan while allocating the lower basin run-of-the-river projects to India has sparked serious objections from the Indian side. This decision by Nepal has led to heightened diplomatic engagements, with India taking a firm stance on ensuring its involvement in the Upper Arun project.
The approval of these investments marks a significant milestone in the Nepal-India hydropower partnership, promising to enhance Nepal’s energy capacity and fostering deeper economic ties between the two nations.