WB to lead financial management for proposed Upper Arun Project

KATHMANDU: A preliminary agreement has been reached for the financial management of the proposed 1063-megawatt Upper Arun Semi-Reservoir Hydropower project in Sankhuwasabha district.

The Ministry of Finance disclosed that this development occurred during discussions between Finance Minister Barshaman Pun and high-level officials from the World Bank in Washington DC.

Minister Pun is currently in the United States of America to participate in a joint session of the World Bank and the International Monetary Fund (IMF).

In a meeting between the Finance Minister and the World Bank's Vice President for South Asia, Martin Raiser, the focus was on expediting World Bank-funded projects in Nepal, including the proposed Upper Arun project.

Discussions also revolved around increasing facilities from the International Development Association (IDA) under the World Bank Group for Nepal and diversifying projects.

According to Shree Krishna Nepal, a joint-secretary at the Ministry of Finance and a member of the visiting delegation, the World Bank will assume the lead role in the financial management of the Upper Arun project based on the preliminary agreement.

Formalization of this agreement awaits endorsement from the Government of Nepal.

The agreement outlines a 70 percent loan investment for the project from the World Bank's co-financing, with the remaining 30 percent to be sourced from equity funds.

The total project cost is yet to be determined.

Progress has been reported in the preparatory works for the project, including the construction of a two-kilometer tunnel and a 21-kilometer approach road.

The Ministry noted that land acquisition and compensation distribution processes for affected parties are nearing completion.

Additionally, Finance Minister Pun held a meeting with Scott Nathan, Chief Executive Officer of the US International Development Finance Corporation (DFC).

During the meeting, Minister Pun reaffirmed the Nepali Government's commitment to creating a conducive environment for promoting foreign investment domestically.

He highlighted the government's policy of recognizing the private sector as a development partner and pledged to remove legal, procedural, and administrative hurdles to facilitate investment. Minister Pun also urged US investors to explore opportunities in Nepal.

The partnership between DFC and Nepal currently amounts to 2.27 million US dollars, including loans for the private sector and equity.