Kathmandu: A meeting of the Investment Board Nepal (IBN) approved the final Project Development Agreement (PDA) draft to be signed with India's state-owned SJVN to develop 669 MW Lower Arun Hydropower project.

Approval of the PDA for the hydel project to be undertaken in Eastern Nepal comes ahead of Nepal PM Pushpa Kamal Dahal's India visit which is set to start from Wednesday. The draft is due to be approved by the cabinet.

"The 54th board meeting of the IBN chaired by Prime Minister Dahal approved the draft on Sunday," a release from the Investment Board Nepal (IBN) stated.

The state-owned Indian company, SJVN has formed a local company - Lower Arun Power Development Company in Nepal to undertake the project. Earlier on April 14, the 53rd meeting of the IBN had approved an investment worth 92.68 Billion Nepali rupees which was proposed by SJVN to develop the project.

The proposed hydropower project- Lower Arun will not have any reservoir or dam and will be a tailrace development of Arun-III, which will mean water re-enters the river for the Lower Arun project.

This is the third project undertaken, all through negotiation windows, on the Arun River after the 900 MW Arun-III and 695 MW Arun-IV hydroelectricity projects. The three projects will generate nearly 2,300 MW of electricity from the river in Sankhuwasabha district.

In addition, the meeting held on Sunday also initiated the process of parting ways with Power China from the 679 MW Tamor Reservoir project. The meeting decided to seek clarification from Power China regarding the lack of progress in accordance with the agreement and action plan outlined by the Nepali company, Hydroelectricity Investment and Development Company (HIDCL).

HIDCL has formally written a letter to the Investment Board of Nepal, requesting them to discontinue the agreement signed with Power China in October 2019. In response to HIDCL's request, the Investment Board of Nepal (IBN) decided to send a letter to Power China, urging them to provide clarification regarding the concerns raised.

Three years back, an agreement was signed during Chinese President Xi Jinping's visit to Nepal. According to the agreement, Power China committed to investing 74 per cent in the mentioned

project. The Nepal government has planned to exclude Power China from the Tamor reservoir project and bring in an Indian company.