Investment Board Nepal (IBN) on Thursday granted an electricity generation licence to SJVN Arun-3 Power Development Company to generate power from the Arun-3 Hydropower Project located in eastern Nepal.

IBN awarded the permit to the Indian developer of the 900 MW plant in line with the decision of the 30th meeting of IBN's board of directors chaired by Prime Minister KP Sharma Oli on April 28. SJVN paid the board Rs5 million as licence fee. 

The licence to generate power has been issued just before Indian Prime Minister Narendra Modi's scheduled visit to Nepal. Multiple government sources confirmed that the Indian and Nepali prime ministers would jointly lay the foundation stone for the hydropower plant remotely.

The foundation stone laying ceremony had been originally planned for April when Prime Minister Oli visited New Delhi. The ceremony was put off after Nepal said that preparatory work had not been completed. According to several sources, Nepal sought to defer the scheduled programme as the project’s generation licence, which allows the company to produce energy, had not been issued.

IBN’s 29th board meeting held on March 9 had decided to direct its CEO to publish a 35-day public notice stating the intent to award the licence to the Indian firm. No claim was filed or concern was expressed against the development of the project during the 35-day period, which paved the way for IBN to issue the generation licence. SJVN applied for the generation licence around one and a half months ago.

SJVN has so far hired a contractor to implement the first package of the civil works that include construction of a dam, diversion tunnel, headrace tunnel and intake tunnels. The contractor has also mobilised a team to the dam site. The project developer is in the process of hiring contractors to build a powerhouse and transmission lines, and to execute the electro- and hydro-mechanical works.

The project has completed major tasks like acquisition of private land and is in the process of acquiring public forest land. According to IBN, Nepal will receive Rs348 billion over 25 years from the project. The project developer will also provide 21.9 percent of the energy free of cost, which is worth Rs155 billion, plus another Rs107 billion in royalties.