After the parliamentary elections of 2048, the government led by Nepali Congress leader Girija Prasad Koirala was formed. This government decided to go ahead with the 402 MW Arun III project in Sankhuwasabha. To advance this project, the Japanese Cooperation Agency conducted a preliminary study.

At that time, the total cost of the project was estimated at 1.8 billion US dollars. Prime Minister Koirala was seen in the strategy of electrification for the economic development of the country and bringing investment from the private sector for the construction of power projects. In the background that no electricity project was built by the private sector, new and big projects were necessary for electrification.  

The parties seemed to be divided on whether or not to take the help of donor agencies in this project. The left-wing parties represented in the parliament along with the UML were putting forward the argument that the Arun project was not in the interest of the country. Some campaigners were campaigning for the cancellation of the project by raising the issue of environment and local rights.

In this situation, the World Bank, the Asian Development Bank and the Swedish government committed to provide around 17 billion 705 million rupees to build Arun III. Likewise, the governments of Germany, Japan and Finland have also pledged their support. The World Bank and the Asian Development Bank had agreed to give 'soft loans' at 1 percent interest for 30 to 40 years.

The then General Secretary of UML, Madhav Kumar Nepal, wrote a letter to the World Bank in October 2051 and raised questions about the project. Based on that, the World Bank decided not to invest in the project in 2052.  

Kantipur published the news on the front page on 10 February 2048 titled 'About 18 billion support received for Arun Third Plan' prepared by the National News Committee by adding the context of raising funds for the construction of the Arun project, which was much talked about at that time and was considered ambitious.