1,063 MW Upper Arun: Supervision Consultant Selected

1,063 MW Upper Arun: Supervision Consultant Selected

Feb. 22, 2024, 9:18 a.m.

After completing the 456 Upper Tanmakoshi, NEA is now in the final stages of constructing the 1063 MW Upper Arun, which will be the first four-digit hydropower project.

NEA has been building hydropower for over a century, and the construction of Upper Arun demonstrates their enhanced capacity and confidence. Kul Man Ghising, the Managing Director of NEA, led the effort to push for the first four-digit project. During his tenure as CEO of Chilime Hydropower Company, he also began building three-digit projects. He appeared jubilant.

An agreement for supervision consulting was signed in the presence of MD Ghising, who announced his vision to build a major hydropower project during his second tenure.A supervision consultant for the 1,063 megawatt Upper Arun semi-reservoir hydroelectric project, which is going to be built in Bhotkhola village of Sankhuwasabha, has been selected and the contract agreement has been finalized.

The contract agreement has been signed for the consulting service-- tender design, preparation of bidding document, construction supervision and post-construction services for the Upper Arun Hydroelectric Project with the Joint Venture of Tractebel Engineering GmbH, Germany (Lead firm), Tracteble Engineering S.A., France and WAPCOS Limited, India in association with Total Management Services Pvt.Ltd. and Jade Consult Pvt.Ltd., Nepal.

Upper Arun Hydro-Electric Limited, the project promoter, signed a contract agreement with the consultant for construction supervision consulting services. The agreement, which includes tax and provisional sum, amounts to 23.4 million Euros, 445 thousand US dollars, and 643 million rupees. The consultancy service fee will be paid in three currencies: Euro, Dollar, and Rupee.

The consultancy service will last for 117 months. The consultant will prepare design review and tender-related documents during the first phase, which has a duration of 21 months. The second phase involves supervising the construction work of the project, which will take 72 months.

The third phase is providing consulting services for project management and maintenance, which will take 24 months. The Executive Director of Nepal Electricity Authority and Chairman of the Board of Directors of Upper Arun Hydro-Electric Limited, Kulman Ghising, stated that the appointment of a consultant to oversee the construction of the transformative project announced by the government marks a significant milestone in the contract agreement program.

During the first phase, the executive director Ghising emphasized the importance of selecting a contractor for the main structure of the project within 9 months. He urged the contractor to work diligently and complete the task on time.

"We are striving to become a model project for blended financing, with the participation of the Nepal government, state government, local residents of the project-affected district, and common people from all over the country. We are also receiving subsidized loans from international multilateral development partners and loans from local banks and financial institutions," explained the executive director, Ghising.

The World Bank is leading the process, with financial management from international financial institutions. Pre-construction work is currently underway at the project site, and efforts are being made to arrange the project's financing and move it towards construction as quickly as possible by June.

Fadindra Rajjoshi, the company's manager-director, stated that international financial institutions, led by the World Bank, will sign an investment framework agreement worth between 1 billion and 1.2 billion dollars at the upcoming investment conference in May.

NEA Agreement 1.jpg

The estimated cost of the construction project in Upper Arun is 1.75 billion dollars, including interest and price increases. The financing plan involves 70 percent debt and 30 percent equity. The project will collect funds from international financial institutions and domestic banks and financial institutions, as part of a co-financing initiative led by the World Bank.

The Hydroelectricity Investment and Development Company (HIDCL) has signed a memorandum of understanding (MOU) to raise investment through co-financing from 53 Swadeshi banks and financial institutions.

The project's promoter, Upper Arun Hydro Electric Company, will contribute 51 percent of the equity through founder shares, while the remaining 49 percent will come from public shares. The hydropower project involves the Upper Arunama Pradesh government, the local district level in Sankhuwasabha where the project is located, and the Nepal Electricity Authority. Project-affected residents and people across the country will have 49% common shares.

Pre-construction work is underway with the aim of starting construction in early 2026. The project is scheduled to be completed by 2031.

Preparations for the project include the construction of approximately 21 kilometers of access roads, including 2 kilometers of tunnels. Office and housing facilities are also being built at the project site.

The acquisition of 232.14 hectares of private land required for the project has been completed, with about 98 percent of the land already distributed as compensation. The rehabilitation of those displaced by the project is currently ongoing. The project will physically displace approximately 22 households. According to the study, the construction of the project will have relatively low environmental and social impacts.

The project is designed to operate at full capacity for six hours a day during the six months of winter when the demand for electricity is high. It will produce 4.53 billion units of energy annually, with approximately 30% of this energy being produced in winter. The electricity generated will be transmitted to the national system through the proposed substation at Haitar in Sankhuwasabha via a 6 km 400 kV transmission line.

The NEA has included the 30 MW Ikhuwa hydropower project as part of the Upper Arun. Additionally, Ikhuwa is a project that is part of the Janata Jal Vidyut program.

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