India and Nepal on Friday laid a foundation stone for the largest India-backed hydropower project, in a bid to tackle the energy crisis facing the Himalayan nation.
Indian Prime Minister Narendra Modi, who visited Nepal last week and his Nepalese counterpart K.P. Sharma Oli jointly inaugurated the construction of the 900-megawatt (MW) Arun III hydropower project in northeastern Nepal.
The Indian government has funded the project - the largest India-backed hydropower project in Nepal.
The two Prime Ministers expressed hope that the 鈥渙peration of the project would help enhance cooperation in the generation and trade of power between the two countries,鈥� a statement from Nepal鈥檚 Ministry of Foreign Affairs said.
鈥淭hey agreed to enhance bilateral cooperation in the power sector in line with the bilateral Power Trade Agreement,鈥� the statement also read.
The $1.04 billion project developed by India鈥檚 state-owned Satluj Jal Vidyut Nigam Limited will displace 269 families in the remote area of the Sankhuwasabha district. The power from the project expects to supply the north Indian plains and Nepal's eastern region.
鈥淭he project will usher in an era of prosperity and development for the area and will certainly cement the bilateral ties of brotherhood among two traditionally friendly countries,鈥� Nand Lal Sharma, the company鈥檚 managing director, said in a statement on Monday.
A week before the inauguration, the project suffered bomb attacks from an unidentified group, which dented Nepal鈥檚 image as an investment-friendly country.
Nepal has the potential to generate at least 40,000 MW of hydroelectricity, but its current production is only 1,000 MW. The current demand stands at 1,200 MW, but is likely to increase by 100 MW per year, according to experts.
Officials on Monday said various state-run and private companies would generate an additional 1,000 MW of hydropower within a year.
By Deepak Adhikari in Kathmandu, Nepal
Anadolu Agency
energy@aa.com.tr