KATHMANDU: Hydropower Investment and Development Company Limited (HIDCL) has signed an agreement to invest in Upper Arun Hydropower Project.

A memorandum of understanding has been signed between Upper Arun Hydro Electric Limited and HIDCL to raise investment for the construction of 1061 megawatts semi-reservoir project.

In the presence of Minister of Energy, Water Resources and Irrigation Pampha Bhusal, an agreement was signed between Upper Arun Hydroelectric Limited, and HIDCL at Everest Hotel in Baneshwar.

The Upper Arun Hydroelectric Project, declared as a transformative project among the hydroelectric projects by the Government of Nepal, is being promoted and developed by the Upper Arun Hydroelectric Company, a subsidiary of the Nepal Electricity Authority.

Financial management for the construction of the project will be done through concessional loans and equity investments.

Currently, the Ministry of Finance is coordinating efforts to raise loan investment for the project.

Notably, the World Bank, which is providing financial support for the study of the project, has expressed its intention to invest in the project. The World Bank is also leading an initiative to collect loans and investments from foreign financial institutions.

A memorandum of understanding was signed to invest Rs 53 billion 140 million through co-financing by a group of domestic investors (consortium) led by HIDCL.

According to the current study of this peaking Run of River Project located in Bhotkhola Rural Municipality, Sankhuwasabha district, a dam 183 meters long and about 100 meters high will be built on the Arun River and water will be brought through an 8.5 km long tunnel and dropped to the underground power house at Chongrak.

About 4512 gigawatt i.e. 4 billion 510 million units of electricity will be produced annually from the project.

It has been planned to build a 400 kV double circuit transmission line of about 6 km from the power house and connect the generated electricity to the substation at Haitar Sankhuwasabha.

According to the study so far, the total cost of the project is 1 billion 750 million US dollars (about 2 trillion 14 billion Nepalese rupees), including interest during the construction period and price increase.

The feasibility study of this project, which is scheduled to start at the end of 2024 and targeted to complete by the end of 2030, is currently being worked out and a consultant is to be selected for tender design and construction supervision work.

Among the preparatory work of the project, the evaluation of the bids received for the construction of the 21 km long access road of the project is underway, while the compensation for about 225 hectares of land required for the project is being determined and distributed.

About 22 households will be physically displaced by the project, but the study shows that the environmental and social impacts of the project are relatively low. The construction of the access road is planned to start from the first half of 2023.

By maintaining the sense of ownership and participation of the Nepalese people in the development and construction of hydroelectric power, the government has created an opportunity for each Nepali citizen to invest shares in the development of hydroelectric power projects through the internal capital market and to receive appropriate returns.