Nepal’s Finance Minister, Barsaman Pun, currently in America, has secured a crucial agreement with senior World Bank officials in Washington DC regarding the financial management of the 1,063 MW Upper Arun Semi-reservoir Hydroelectric Project in Sankhuwasabha.
According to a press statement from the Finance Minister’s secretariat, Minister Pun and Martin Raiser, Vice President for South Asia at the World Bank, discussed various World Bank-funded projects in Nepal, with a special focus on the Upper Arun initiative.
Shree Krishna Nepal, Joint Secretary and Chief of the International Economic Cooperation Coordination Division of the Ministry of Finance, accompanying Minister Pun, confirmed that both parties have agreed in principle on the World Bank leading the financial management of the Upper Arun project.
Following the government of Nepal’s principal approval, the agreement will be formalized, detailing the financial management arrangements. Under the co-financing arrangement with the World Bank, 30 per cent equity will be managed, while the remaining 70 per cent will be raised through loans from international financial institutions and domestic banks.
The project’s construction cost is yet to be finalized, although progress has been made in constructing a 2 km tunnel and a 21 km access road for Upper Arun. Land acquisition and compensation distribution are nearing completion.
The Upper Arun Hydropower Project is poised to revolutionize Nepal’s energy landscape, operating at full capacity for six hours daily during the high electricity demand winter months, generating approximately 4.53 billion units of energy annually. Electricity produced will be integrated into the national transmission system via a new substation at Haitar in Sankhuwasabha, connected through a 6 km 400 kV transmission line.
Minister Pun highlighted the importance of foreign investment due to limited internal resources for Nepal’s development infrastructure. He expressed gratitude for the World Bank’s assistance and urged for continued investment in Nepal’s future.
Martin Raiser commended Nepal’s preparations for the upcoming IDA-21 meeting in Kathmandu in June, noting Nepal’s advancements in the grid concept. He emphasized the significance of the meeting, which will host representatives from over 90 member countries, as a platform to showcase Nepal’s progress to the world.
Additionally, Minister Pun thanked the World Bank Group for their participation in the 3rd International Investment Summit scheduled for April 28-29 in Kathmandu.
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