Upper Arun Project Signs MoU With Financial Institutions To Build 1061 MW Upper Arun Project

Upper Arun Project Signs MoU With Financial Institutions To Build 1061 MW Upper Arun Project

Sept. 16, 2022, 8:22 a.m.

For Minister of Energy, Water Resources and Irrigation Pampha Bhusal and Managing Director of Nepal Electricity Authority (NEA) Kul Man Ghising today is the most important day in their carrier.

Following the signing of a Memorandum of Understanding (MoU) with a local financial institution under the lead of Hydroelectricity Investment and Development Company Ltd (HIDCL), MD Ghising’s main dream to build 1061 MW, the first four-digit hydropower project , comes true.

This also starts the construction of Nepal’s first four-digit hydropower project.

Had Ghising’s tenure been extended two years ago, the project would have started last year. For Minister Bhusal, this is a major success as a minister to paving the way for the construction of the largest hydropower pr project in Nepal.

“This is a matter of pride and history for me to see the signing of MoU for the loan. This is possible due to the efforts of my party’s predecessors who also have made contributions to make this event possible,” said Minister Bhusal.

In a carrier as an NEA MD in the second year of his second tenure, Ghising said the signing of the MoU is a highly important event for Nepal and Nepal’s hydropower sector.

“We are now in a position to construct a project with four digits. After completion of three-digit hydropower project Upper Tamakoshi, our confidence has gone up and NEA will complete the project in time,” said MD Ghising.

“As the World Bank has already agreed to invest in Upper Arun, the signing of MoU with local financial institutions opens the opportunities,” said Ghising. In his first tenure, Ghising added over 600 MW of power to the national grid. During this tenure, he signed MoU to construct almost 1700 MW of capacity hydropower project.

He said that NEA will now on construct only big projects and IPPs will be allowed to construct the smaller projects.

Under the leadership of Hydroelectricity Investment and Development Company Ltd (HIDCL), a Memorandum of Understanding (MoU) has been signed for loan investment to the 1061 MW Upper Arun Hydropower Project to be constructed in Sankhuwasabha.

The MoU was signed by Nepal Electricity, Upper Arun Hydropower Ltd, the promoter of the project, Nepal Bank Ltd, Rashtriya Banijya Bank and Citizenship Investment Fund in the presence of Minister for Energy, Water Resources and Irrigation Pampha Bhusal. Employees Provident Fund (EPF) will sign the document later.

Signed and exchanged among MD of NEA Ghising, Managing Director of Upper Karnali Hydropower Company Phanindra Raj Joshi, CEO of Nepal Bank and Rashtriya Banijyat Bank, the MoU guaranteed the investment from local financial institutions. Under this, they will invest Rs.53.34 billion out of Rs 214 billion in total costs.

Being constructed under the People's Hydropower Program, the project will also raise money from equity by issuing shares to the general public.

The project, with an estimated total cost of Rs 214 billion, has Rs.64.46 billion as equity and Rs. 150 billion as loans. Out of the loan, the World Bank-led consortium including European Investment Bank and others will invest Rs. 97. 06 billion.

The Upper Arun Hydroelectric Limited (UAHEL), a subsidiary of the Nepal Electricity Authority (NEA), has already invited expressions of interest from 22 May from eligible consulting firms to assist with the development of the 1061 MW Upper Arun project in eastern Nepal.

The project will include the construction of a concrete gravity dam with arc axis on the Arun river, one of the major tributaries of the Sapt Koshi river basin, with a crest elevation of 1653 m, a maximum height of 100 m, and a total crest length of 183 m, to create a peaking reservoir with full supply level of 1640 m, a minimum operating level of 1625 m and peaking poundage of 2.41 million m3.

The reservoir with a total capacity of 5.07 million m3 will be used for peaking power production during the dry season and for sediment trapping to avoid the construction of an underground desander. An ungated free overflow spillway will ensure management of floods and Glacial lake Outburst Floods (GLOFs) while four low-level and two medium-level outlets within the dam will enable flood and sediment management.

The project will also feature an underground powerhouse on the left bank of the Arun river, about 1.4 km upstream of its confluence with the Leksuwa river, to be equipped with six sets of six-nozzle vertical-axis Pelton turbine-generating units each with a rated capacity of 173.33 MW. The units will operate under a minimum rated head of 508 m and rated flow of 39.24 m3/s. Water will be supplied to the powerhouse via a 1.4 km-long low-pressure headrace tunnel with a diameter of 8.4 m.

The locals have been demanding that the construction of the 1,061 MW semi-reservoir Upper Arun Hydropower Project in Bhotkhola Rural Municipality of Sankhuwasabha district be started immediately.

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To meet the growing demands of electricity in the country, NEA has announced to start the construction of the Upper Arun Hydroelectric Project in 2021 targeting to complete in 2026.

After his assumption of the Managing Director post by Ghising, he chooses two projects Upper Arun and Dhudkosi two projects as storage projects to meet the demand for picking.

“ The implementation of Upper Arun is no on. We are negotiating with Asian Development Bank for the funding of the Dhudhkosi Storage project,” said MD Ghising. “We have advanced a process of construction of Upper Arun Hydroelectricity Project placing it under a high priority.”

NEA has called a pre-qualification notice to select a Contractor Company for the construction of a 24-kilometer access road. The road section includes 2 kilometers tunnel and two bridges to reach the Chepuwa dam site from the Chyangran market point of Biratnagar-Kimathanka (Kosi Highway).

According to the working schedule, after evaluating proposals of interested companies, NEA is planning to seek technical and financial proposals from a successful company for pre-qualification.

”We are working under a work schedule to start the construction of the road,” said Ghising,. “A design of access road has now been completed. Our aim is not to make any delay in the construction work of the main structure of the project.”

According to MD Ghising, NEA has a plan to complete the construction of road within 24 months. NEA will complete the detailed engineering design and selection of contractors and prospective investors in parallel with the road construction period.

Compared with energy generation, the cost of the project is much cheaper. “The project will generate more energy during winter.

The government has already decided to construct the project in the company model issuing shares to the public.

World Bank has already said that it is ready to invest in the project constructed through the company issuing shares to the public. ” The money will be no problem. We can manage resources through the financial institutions/”

After pulling out from Arun III, World Bank has not invested in any hydropower project. Energy, Water Resource and Irrigation Minister Barsha Man Pun, Minister of Finance Yubaraj Khatiwada and vice president of World Bank Hartwig Schafer are paying site visit of the project.

The Upper Arun project was identified under the Kosi Basin Master plan as a semi-storage project with a capacity of 335 MW and 2.65 billion Unit annual energy. NEA conducted a pre-feasibility study in 1991 and it reviews the pre-feasibility study in 2011.

The review showed that the project has a capacity of 700 MW with an estimated cost US$ 900 million. Since the project lies in the high Himalayan zone, it will have very less effect on human beings and fewer environmental implications. NEA has already pushed 30 MW Ikhuwa Hydropower project which is going to be a part of Upper Arun.

.Minister Bhusal said that a detailed study of the project will be completed as soon as possible and construction will start after finalizing the investment issue. "The project is being discussed but will not be constructed for decades. We are making every effort to end this kind of trend and build it for the benefit of the local people," she said.

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