Auma-Solutions for a world in motion
Auma-Solutions for a world in motion

SJVN signs an MoU for the Lower Arun project in Nepal

Indian hydropower producer Satluj Jal Vidyut Nigam (SJVN), a joint venture of the Government of India and the Government of India’s northern state of Himachal Pradesh, has signed a Memorandum of Under­standing (MoU) with the Investment Board of Nepal (IBN) for the development of the 679 MW Lower Arun hydro project in eastern Nepal.

SJVN was selected in January following an international competitive bidding process to develop the US$ 1.3 billion project, which will be the single largest foreign investment in Nepal. The MoU was signed on 11 July by Nand Lal Sharma, Chairman and Managing Director of SJVN, with Sushil Bhatta, the CEO of IBN, a Nepal Government agency to promote economic development, in the presence of the Deputy Prime Minister of Nepal, Bishnu Prasad Paudel, and the Ambassador of India to Nepal, Vinay Mohan Kwatra. According to the terms of the MoU, the developer should complete a detailed project study for approval by the IBN within two years of the agreement date. The run-of-river project, in the districts of Sankhuwasabha and Bhojpur, is to be developed under a 25-year concession on a BOOT basis, and is expected to be commissioned within four years from the beginning of construction, according to SJVN. Nepal’s Finance Minister, Bishnu Prasad Paudel, who is also the Vice-Chairman of the IBN, said the Government of Nepal would extend all necessary support to expedite project development. It is designed to generate 2970 GWh/year from four Francis units.

The project is designed to use tailrace flow from the 900 MW Arun 3 project, which is also being built by SJVN. Construction of the US$ 1.04 billion Arun 3 run-of-river project, on the Arun river in Sankhuwasabha district, began in May 2018, and is scheduled to be completed in 2023. Its main features will be a 70 m-high concrete gravity dam, an 11.7 km-long headrace tunnel and underground powerhouse equipped with four 225 MW units. Significant progress has been made on the project over the last three years, despite the global pandemic, the Chairman of SJVN said on 10 July, during a site visit with the Prime Minister of Nepal, K.P. Sharma Oli. Nand Lal Sharma stressed that Nepal’s hydro­power resources should be developed within an integrated river basin development approach, to maximize economic viability. This approach will result in optimization of re­sources and faster completion at lower cost, he said. He also requested that the Government of Nepal provide further opportunities to SJVN to help harness Nepal’s hydropower potential. Meanwhile, SJVN is also to build the 600 MW Kholongchhu hydro project in eastern Bhutan under a concession agreement signed in June 2020.

This run-of-the-river scheme will be implemented in a joint venture with Bhutan’s Druk Green Power Corporation (DGPC. The project will be built on the lower course of the Kholongchhu river and will feature a 95 m-high concrete gravity dam and an underground powerhouse, to be equipped with four 150 MW turbines, which will generate average annual output of 2569 GWh. The project, which will cost an estimated INR 46.33 billion (US$ 618.9 million), is expected to be commissioned in the second half of 2025.