IBN on July 11, 2021, signed a pact with India’s state-owned Satluj Jal Vidyut Nigam to develop the Lower Arun Hydropower project in eastern Nepal. This is the second mega project undertaken by the SJVN after the $1.04bn 900-MW Arun-III hydroelectric project in the Arun River.
As per the draft of the PDA, the project developer has to provide 21 percent of the total energy produced from the Lower Arun HEP to Nepal for free. The developer has been provided an income tax exemption for 15 years after the start of power generation. After the start of commercial production, the company will have to pay $11,000 per month to IBN. The IBN board meeting has also advanced the process of eviction of the Chinese company Power China from the 756 MW capacity Tamor Reservoir Hydroelectric Project. Providing a month's time, the meeting on Sunday decided to seek an explanation saying why the work is not progressing according to the agreement and action plan made by Power China to make the project together with the Nepali company HIDCL. “It has been decided to correspond with Power China regarding compliance with the Memorandum of Understanding dated 19 Jan 2020,” states a press statement issued by IBN. The HIDCL and Power China signed an agreement to develop the Tamor Project during Chinese President Xi Jinping’s visit to Nepal in 2019. Of late, HIDCL found it difficult to sell electricity in the Indian market while constructing the project in collaboration with a Chinese company, and it sent a proposal to the IBN to cancel this agreement. According to the IBN sources, the government decided to give one month's time to the Chinese company so that no legal dispute would arise later. Interestingly, the SJVN has shown interest in developing the Tamor Reservoir Project and has sought permission from the government.
