February 23: Indian Government has allocated Rs 91.57 billion for the construction of 900MW Arun III Hydroelectricity Project (HEP) located at Sankhuwashabha. The meeting of  Indian cabinet of ministers under the chairmanship of Indian Prime Minister Narendra Modi on February 22 allocated INR Rs 57.23 billion for the HEP. According to online portal of Times of India, Indian Power Minister Piyush Goyal confirmed the news of HEP. "The HEP is expected to get a financial closure within this September and conclude within the next five years," said Goyal.

With the confirmation, construction possibility of Arun III has increased which was  lingering since nearly two decades. The project is being constructed by Central Government of India along with Satluj Jal Vidhyut Nigam (SJVN) partially owned by government of Himanchal Pradesh.  Nepal Investment Board and SJVN already concluded Project Development Agreement (PDA) regarding the construction of the HEP.

RN Mishra, Chairman and Managing Director of SJVN express his happiness on approval of the long waited budget for the HEP. The electricity produced from Arun III HEP will mostly be sent to India and the developer will be benefited for 25 years from the HEP. In the course, Nepal will get 1/5 of electricity produced from the HEP free and will received nearly Rs 350 billion as royalty and various other charges.

SJVN has nearly finished the compensation distribution task to HEP affected locals. Till date, it has spent nearly Rs 1.25 billion on compensation distribution. It is rumoured that the company spent excessive money under valuation and other topics for the locals.

Gains and losses of Nepal

• Nepal gets 21.9 per cent/ 197.1 MW free electricity from the 9MW HEP
• Nepal must provide bulk Rs 4.50 billion as of Rs 500,000 per MW to the HEP after the conclusion of construction.
• The company, after commencing production, is entitled of 100 per cent tax exemption for 10 years and of 50 per cent for following 5 years from Nepal.
• 50 per cent discount on custom charge in cements, rods and steel merchandise imported for the HEP.
• Nepal government must compensate the company if the government halts any approval, change in legal policies and strikes for more than 21 days caused by general strikes, constrictions and state of emergency.