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The 1,063 MW Upper Arun Hydroelectric Project, which is being developed by Upper Arun Hydro-Electric Limited, a subsidiary company of the Nepal Electricity Authority, in Bhotkhola Rural Municipality of Sankhuwasabha, has received a power generation license.

The Department of Electricity Development granted the license to the project in accordance with a secretary-level decision made by the Ministry of Energy, Water Resources and Irrigation on 27 April.

Preparatory works required to begin construction of the project have almost reached the final stage. So far, acquisition of 413 ropanis of land required for the project has been completed.

Construction of the 21.19-kilometer access road from Chhorang in Bhotkhola Rural Municipality–4 to Rukuma Phedi in Bhotkhola Rural Municipality–2 is also nearing completion. Since February/ March 2025, construction materials have been transported by helicopter to accelerate the access road works.

Construction of permanent housing and other structures required for project workers has also reached the final stage. Permanent resettlement of 23 households fully displaced by the project has already been completed, while compensation and various empowerment programs are being implemented for 335 economically affected households.

The distribution of compensation for land acquisition has also been completed by 98 percent.

Preparations are also underway for the Power Purchase Agreement (PPA) with the Nepal Electricity Authority. Separate packages are being prepared and bid documents are under development for the construction of civil structures, electro-mechanical works, hydro-mechanical works, and transmission lines.

Under the project, a dam measuring 183 meters in length and 100 meters in height will be constructed around 350 meters upstream from the confluence of the Arun River and Chepuwa Khola. Water from the river will be diverted through an intake into an 8,362-meter-long headrace tunnel and then through a surge tank into an underground powerhouse measuring 25 meters wide.

The project is designed to operate 6 hours daily during peak hours, with an average output of 697 MW throughout the year. It is estimated to generate 4,531 GWh of electricity annually. The generated power will be connected to the proposed Arun Hub Substation through a 5.8-kilometer-long 400 kV transmission line.

The project cost is estimated at around NPR 240 billion. The financing structure includes 70 percent debt and 30 percent equity. A co-financing agreement worth NPR 53.341 billion has already been signed in 2022 under the leadership of the Hydroelectricity Investment and Development Company Limited. Discussions are also ongoing with the World Bank for debt financing.

The Environmental Impact Assessment (EIA) report was approved on 3 January, 2025. The project was first studied in 1991, revisited in 2011, and is being developed based on an updated feasibility study conducted in 2021. The project is targeted for completion within 68 months from the start of construction.

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