The residents of Sankhuwasabha were confident that their village would develop from the Arun III Hydropower Project. The World Bank was preparing to invest in the construction of the project. The construction of the access road had begun. Helicopters flew daily along the banks of the Arun River, shaking the mountains at the construction site.

Some materials were also brought for the construction of Arun III. A 275-meter tunnel for the project had been dug. Some had already found employment. They used to earn a daily wage of 30/40 rupees, but after Arun came, local workers started earning 40/50 rupees daily.

The target of generating 102 megawatts of electricity in the first phase and since it became the largest project in Nepal at that time in terms of investment, the locals hoped that the dark village would be illuminated. That is why the residents of the valley were very excited about Arun.

But before the dream of change seen by the locals could be fulfilled, the World Bank decided not to invest in Arun in 1995. The residents of Arun Valley were disappointed by the World Bank's decision. However, they were waiting for Arun to return until 2053 Magh, i.e. 1997, two years after the cancellation. They were feeling their luck was taken away by the news that Arun would not be built.

After walking a day's journey north from Khandwari, they saw from the disco in Numgaun that all preparations for construction at the foot of Dehangnagadhi, Mode Danda, and Marmisa Danda had been completed. Tenzing Shepa, a local from Numna, had said, 'We rejoiced in the hope of bringing light to a dark place. But what can we do when there is no luck? It seems that we will have to live in darkness for the rest of our lives.'

Not only Tenzing, but also the despair of 50-year-old Rudra Bahadur Rai of Hedangna was pitiful. He had said, ‘Arun will not come, it will come after 20-25 years. It will probably not come in our time.’ The materials brought to make Arun were being taken away in a hurry. This made the villagers even more disappointed.

Local residents complained, ‘None of the people here are educated, they did not get good jobs, yet they were able to see the face of the rupee by working as porters, but they did not get that either. People from Dharan, Biratnagar and Bhojpur have come to work as porters.’

The porters earned up to 5,000 rupees per month. The people here could see the face of money only by carrying the burden of foreigners going to see the Makalu Himal or by going to Dhankuta and working as porters. Apart from that, locals used to say that the people here had no other source of income. If they had to go to get salt and oil, and if they had to walk four days to get seeds for farming, they had to reach Hungum.

After the Arun project was coming, a branch of Nepal Bank was also opened there. But when the project did not come, the bank was in danger of sinking. Locals have informed that discussions are underway to move the bank. The situation of the Agricultural Development Bank was also similar. Krishna Kathayat, the manager of the Agricultural Bank, had said, ‘There is no source of income for the people in the village.

They only farm and eat food throughout the year.’ The bank employees said that they could not invest in loans because most of the people were illiterate. The investment made by the bank had not been recovered. The bank complained that even though the loans were used for production, they could not be recovered. It was expected that if Arun had become the president, the recovery of loans would be easier through economic maneuvers. The bank employees used to say, ‘The loan has crossed Rs. 45 billion. If the loan is not recovered, the bank has no choice but to go bankrupt.’

The project, which was planned to be built at a cost of Rs. 45 billion in the first phase, was canceled during the UML government. The UML leadership, national/international organizations, and active groups in the name of local concerns played a role in getting the project canceled.

But even then, Lahre Sherpa of Num Thumko in the Arun Valley had said, ‘A great chief engineer from Germany had come.’ He said, ‘You don’t need to panic.’ They said it would be built in a few years.' Pointing to his young children, he said, 'Even if it came during their time, it would have been good, I am old.'

The news that was prepared by the residents of the area after the cancellation of the Arun project and the negative impact of not building Arun was published by Kantipur Daily on Magh 13, 2053 under the title 'Arun Valley residents complain that their fortune has been taken away'. As the then Congress government prepared to build Arun III, the 'Arun Concern Group' led by Gopal Siwakoti was formed. Along with this group, organizations like Alliance for Energy and Inherited Nepal also came out in opposition to Arun.

These organizations were supported by INGOs in the UK and the US, including the International River Network, The Global International, the International Technology Development Group, Greenpeace Environment Defense Fund, Friends of the Earth, and others. On August 3, 1995, the World Bank issued a press release in which the bank's president, James Wolfson, informed that it would not invest in Arun. President Wolfson called the then Prime Minister Manmohan Adhikari from Washington on July 18, 2052, and informed him that it would not invest in Arun.

The project was planned to be built in two phases and generate 402 megawatts. UML is still accused of having written to the World Bank and having the project canceled at that time. India is currently constructing the project in a new form to generate 900 megawatts of electricity.

The foundation stone of the project was laid by Indian Prime Minister Narendra Modi and Prime Minister KP Sharma Oli at the Hyatt Hotel in Nepal in 2075 Baisakh via video conferencing. The Investment Board of Nepal had granted production permission to Sutlej Vidyut Nigam (SJVN) Nepal, the promoter of Arun.