Will Nepal Support Indian Firms in Hydropower Development?
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Synopsis
Nepal is taking significant steps to support Indian companies in developing hydropower projects, including the Lower Arun Hydropower Project. This partnership aims to enhance infrastructure and foreign investment in the region. Discover how these developments will impact Nepal's energy landscape.
Key Takeaways
- Investment Board Nepal supports Indian firms in hydropower.
- The 669MW Lower Arun Hydropower Project is a key project.
- SJVN Limited is a major player in Nepal's energy sector.
- Direct agreements will enhance investment security.
- NHPC Limited is also involved in significant projects.
Kathmandu, Nov 19 (NationPress) The Investment Board Nepal (IBN) has implemented a series of measures aimed at assisting Indian enterprises in the establishment of various hydropower projects within Nepal.
A gathering of the IBN, presided over by Prime Minister Sushila Karki on Wednesday, has opened doors for a company backed by SJVN Limited from India to secure a generation license for the 669MW Lower Arun Hydropower Project.
As per a declaration from the Prime Minister’s Secretariat, the IBN’s Chief Executive Officer has been empowered to issue the generation license to SJVN Lower Arun Power Development Company, a subsidiary of SJVN Limited.
The Indian firm was awarded a survey license in 2021 and later formed a domestic entity to conduct the survey operations. SJVN Limited is also engaged in the development of the 900 MW Arun–3 Hydropower Project on the same river, which is presently under construction.
Additionally, the IBN meeting decided to present a draft of the Direct Agreement to be entered into with SJVN Limited and its financiers for the Arun–3 Hydropower Project, aimed at protecting foreign investments and ensuring project financing.
This direct agreement will provide lenders access to project documentation, adhering to global best practices for large-scale infrastructure financing. Generally, such agreements involve a tripartite arrangement among the host government, project developer, and lenders.
The meeting also resolved to extend the survey license period for the 750 MW West Seti reservoir-based hydropower project. NHPC Limited, an Indian state-owned corporation, was granted the survey license for this project in 2022.
Previously, the license was awarded to China Three Gorges Corporation, which chose not to proceed, citing market guarantee risks. The Indian entity subsequently stepped in to advance the project.
NHPC Limited was also granted survey licenses for both the West Seti project and the 450 MW Seti River–6 (SR–6) project in 2022.
Point of View
This initiative by the Investment Board Nepal signifies a strategic alignment with Indian firms, enhancing infrastructure and energy capabilities in the country. It reflects a proactive approach towards foreign investment, potentially leading to economic growth and improved energy security for Nepal.
NationPress
19/11/2025
Frequently Asked Questions
What is the significance of the Lower Arun Hydropower Project?
The Lower Arun Hydropower Project, with a capacity of 669MW, is crucial for enhancing Nepal's energy generation and supporting economic growth through increased foreign investment.
Who is involved in the development of these projects?
Indian companies like SJVN Limited and NHPC Limited are leading the development of major hydropower projects in Nepal, including the Lower Arun and West Seti projects.
How does the Direct Agreement protect investments?
The Direct Agreement allows lenders access to project documents, ensuring transparency and safeguarding foreign investments, which is essential for large-scale infrastructure financing.
