May 16: The governments of Nepal and India have signed a Memorandum of Understanding (MoU) for the construction of the proposed 490.2 megawatts Arun-4 hydropower project. Such a deal was signed during the official visit of Indian Prime Minister Narendra Modi to Lumbini on the occasion of the Buddha Jayanti Festival.

The Indian PM arrived in Lumbini on Monday morning at the invitation of Prime Minister Sher Bahadur Deuba.    

Executive Director of Nepal Electricity Authority (NEA), Kulman Ghising and Nanda Lal Sharma, chairperson and operation manager of Satluj Jal Vidyut Nigam, an Indian hydropower company, signed the MoU for the construction of the joint venture semi-reservoir based hydropower project on Monday.

The signing ceremony took place in the presence of Prime Minister Deuba and his visiting Indian counterpart Narendra Modi.    

The two countries had reached an agreement to construct the Arun-4 hydropower project during PM Deuba’s state visit to India in the first week of April.

According to the state-owned national news agency RSS, NEA has a share of 49 percent investment and the Satluj Jal Vidyut Nigam 51 percent in the Sankhwasabha-based Arun-III hydropower project estimated to cost around Rs 79.1 billion.

Nepal will get 21.9 percent electricity from the project free of cost every month. Nepal reserves the right to purchase electricity generated from the project if it can afford to consume it. Only then, the surplus power generated from the project will be sold elsewhere to India or Bangladesh, RSS reported.    

The project has the capacity of generating 2.1 billion units of electricity annually.  (With inputs from RSS)