The UML had the opportunity to lead the government through the results of the 2051 mid-term elections. While in opposition, the UML had been pushing the idea on the streets and in the House that the Arun III Hydropower Project should not be built with a World Bank loan.

The project could not proceed due to opposition from UML, national and international organizations and human rights activists. But after leading the government, there was a sign of a change in UML's attitude towards Arun.

Although the plan to construct Arun-3 had been made since the Panchayat period, investment could not be secured. Continuing that, the Congress-led government formed in 2048 BS had moved forward with the process of constructing Arun with a loan from the World Bank, but the strong opposition from UML was creating obstacles.

UML government's Deputy Prime Minister, Foreign Minister and Defense Minister Madhav Kumar Nepal had informed the media that in February 2051, he had written a 'positive letter' to the World Bank President with some conditions to proceed with Arun. The positive sign was seen after the government informed the World Bank that the construction of Arun could be completed by 2000, with a review.

The government had written a letter stating that the 193 km elevated road to be built to reach the project should be maintained, that the provision of World Bank permission should be removed if the Electricity Authority or the government wants to build a power project exceeding 10 MW, and that there should be no condition to increase electricity tariffs, among other points.

UML had been opposing the construction of the project, putting forward an agenda such as the environmental damage caused by building Arun, that the World Bank's conditions would not benefit Nepal, and that there would be no significant economic change in local life. After the letter showing some flexibility in that, the possibility of the Arun project being built increased.

A delegation led by Water Resources Minister Hari Prasad Pandey had discussed with World Bank officials in Washington DC. At that time, the government said that the bank had imposed strict conditions on the loan of 175 million US dollars to be provided for the construction of the project.

Pandey had requested the bank officials to review the cost of the access road and the construction of the small hydropower project. The bank officials, however, did not agree to review the project. The cost of the access road was estimated to be 76.7 million US dollars. However, Pandey had suggested that the cost could be reduced if the Nepali people were allowed to build the access road.

At that time, the bank did not accept the proposal to cancel the 122 km lower road and build the 193 km road. The argument was put forward that the cost would be too expensive if the bank were to invest in Arun with a loan.

The bank, however, argued that it had prepared the road project after a thorough study and that reviewing it would delay its implementation. A tender had been called in 1994 for the construction of the 122 km road. But due to the dispute, the work could not proceed.

The news prepared by journalist Akhilesh Upadhyay, who had been opposing Arun for a long time, was published in Kantipur Daily on 21 Falgun 2051 under the title ‘Arun-3 Project to be Implemented’, with reference to the issue of UML, which had been showing positive signs after coming to power, as a reference material.

The UML had written positively on the World Bank loan and the construction of Arun, which had become a major issue in the country, and it was hoped that a mega power project would be built with foreign investment. Panchayats had generated 2.25 megawatts of electricity across the country.