When the UML was in opposition, it was negative about the World Bank's investment in the Arun III Hydropower Project. The UML had been arguing that the World Bank's investment should not be brought to Arun, citing reasons such as the World Bank's investment being too expensive, the project's construction having a major impact on the environment of the affected areas, the project not yielding expected returns, and the lack of significant support to improve the living standards of the locals.

After 2048, the UML, which had been arguing that the project that the Congress-led government was going to take forward should not be introduced, had been asked by the World Bank whether to invest in it after it came to power.

The question was asked because a decision could be made on Arun's financial investment at the World Bank meeting to be held in Washington, D.C. on December 11, 2008. Congress MP and former Vice Chairman of the National Planning Commission Ram Sharan Mahat had submitted a proposal of public importance for discussion in the House of Representatives meeting on December 13, 2008 regarding the project, which was being opposed by national and international organizations including the UML. He had said that the government's opinion should be sent before that since the World Bank could take a decision on the investment on December 11.

Mahat was of the opinion that there was no alternative to the Arun project to meet the demand for energy and for economic growth. In a public importance discussion held in the House of Representatives on December 15, 2008, Congress and Rastriya Prajatantra Party MPs had expressed their views in favor of Arun. Opposition MPs including Congress had said that the UML's opposition to the World Bank's 'soft loan' should not have been rejected before joining the government was wrong. After leading the

government, the UML had shown some positive signs regarding Arun. After coming to power, the UML, which had been very strong in its opposition to Arun, had started saying that the project should be implemented even at a reduced cost. While answering questions raised in the discussion in Parliament, the then Minister of State for Water Resources, Hari Pandey, had raised issues such as the project being expensive, the conditions set by the World Bank being difficult to meet, and the need to build 197 km of roads in the affected areas. But he had admitted that there was no alternative to Arun. Pandey had informed the House that the government had asked the World Bank for three weeks to make a decision.