India and Nepal have signed a $1.04bn Arun III agreement to build a 900MW hydroelectric power plant on the river Arun in the Himalayan country.
The signing of the agreement coincides with the visit of Indian Prime Minister Narendra Modi to Nepal to attend the SAARC meet.
The plant will be built by India’s state-owned Satluj Jal Vidyut Nigam (SJVN) and will supply around 22% of the electricity generated to Nepal for free.
Nepal will earn $3.48bn over 25 years in royalty, income and taxes from the plant, officials told Reuters. The country will take over the ownership of the project after 25 years.
The project was originally cleared in 2008 but not undertaken as Nepal negotiated for more benefits, the news agency reported.
Nepal currently produces 800MW hydropower as against its potential of 42,000MW. The country expects investments of $7bn to be made in the sector in the next five years.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIn September, Indian infrastructure company GMR signed an agreement with Nepal to build the $1.15bn Upper Karnali Hydro power plant.
