India's claim on the Upper Arun hydropower construction as well

Minister Pun and World Bank's Vice President for South Asia, Martin Razer, discussed the World Bank-funded projects in Nepal including the Upper Arun and agreed in principle for the construction. Along with that, the way was cleared by theoretical agreement on the financial management of the 1 thousand 63 MW Upper Arun semi-reservoir hydropower project to be built in Sankhuwasabha. But according to government and diplomatic sources of Nepal, India is now showing interest in the construction of the hydroelectric project.

After the in-principle approval was given by the Government of Nepal, the agreement was formalized and an agreement regarding financial management was in the process. Talks have been held with the World Bank for the financial management of Upper Arun. After the agreement in principle to be built under the leadership of the World Bank, the Indian officials have sent a message from New Delhi to their mechanism in Washington DC and claimed that India will build the project. According to

sources, the message says that it is appropriate to ask the neighboring countries when constructing the upper Arun. Which was readily accepted by the World Bank headquarters. Currently, the head of the World Bank is Ajay Banga of Indian origin. The World Bank had informed Nepal along with both its neighbors about the activities going on in Washington regarding the Upper Arun Hydropower Project. We learned that the World Bank asked both neighbors of Nepal to comment on the project. China showed no interest in the project. But we learned that India has sent the comments on the Upper Arun Hydropower Project to the World Bank, mentioning that the elections are going on in their country now,'' a senior government official told Kantipur, 'even though the comments will be sent after the elections, the Indian company should be the one to build the project. According to

sources, officials of the Ministry of Energy and Foreign Affairs have raised the matter at the political level. As they are making the previous project as well, they demand that they should be able to make this project by themselves. Although the Upper Arun is going to go ahead with a theoretical agreement with the World Bank, the Nepalese government entrusted the construction of Arun III and Arun Lower to an Indian company. The 900 MW Arun III hydroelectric project is being constructed by the Indian company Sutlej Jalvidyut Nigam (MJVN). Similarly, the Lower Arun Hydropower Project with a capacity of 679 MW is also being constructed by the same Sutlej Vidyut Nigam (SJVN). Sutlej is a joint venture between the Central Government of India and the Government of Himachal Pradesh.

The Upper Arun Hydroelectric Project of 695 megawatt capacity has been advanced with the co-financing of the World Bank, with concessional loans from international financial institutions and 70 percent loan investment from domestic banks and financial institutions, as well as financial management from 30 percent equity. The cost of the construction of the project is yet to be decided. Officials of the Ministry of Finance, the Ministry of Energy and the officials of the World Bank and the Asian Development Bank are continuously discussing about the project and doing their homework for the construction. Construction of 2 km tunnel road and 21 km access road has been progressed in preparation of Upper Arun. The government says that land acquisition and distribution of compensation is almost over.

It is believed to be an important project for the Upper Arun country, which will be operated at full capacity for 6 hours a day for 6 months in winter, when there is a high demand for electricity. The project will produce 4.53 billion units of energy annually. There is a government plan to connect the generated electricity to the national transmission system through a new substation to be built at Haitar in Sankhuwasabha through a 6 km 400 KV transmission line. The government has included the 635 MW Dudhkoshi hydropower project to be built in Bhunwaghat as a project of national pride. In the

meeting, there was a discussion about speeding up the work of other development projects funded by the World Bank. According to the Ministry of Finance, talks are also being held about increasing the facility of the International Development Association (IDA), the World Bank's subsidized lending institution that Nepal has traditionally used, and diversifying the projects.