India and Nepal plan to draft a project development agreement (PDA), with an aim to generate hydroelectric power in the Himalayan country.
Nepal Investment Board and India’s Staluj Vidyut Nigam aim to develop the 900MW Arun III project on the Arun river.
This will be the second project development agreement being signed by the Nepalese and Indian governments by the end of November 2014. The contract will be signed during Indian Prime Minister Narendra Modi’s visit to Nepal for the 18th SAARC Summit, reports Business Standard.
Under the proposed deal, SJVN, which is a state-owned power company, will supply 21.9% of the generated power from the project to the Nepal government free of charge
SJVN will also distribute parts of its share capital among the local people.
The Indian company will make arrangements to resettle and rehabilitate around 300 families from the project site, reports the publication
In addition, it is expected to construct other infrastructures such as roads, bridges, a hospital and schools in the region as part of the corporate social responsibility.
Business Standard quoted NIB external affairs head Ghanashyam Ojha as saying that the draft copy is being sent to SJVN for final approval.
The project is expected to involve $1.5bn of foreign direct investment, which will create job opportunities for thousands of local residents.