India and Nepal PMs launch construction of 900 MW power plant

KATHMANDU (Reuters) - Indian Prime Minister Narendra Modi on Friday visited Nepal to launch building work with his counterpart K.P.Sharma Oli on the country’s biggest hydroelectric project, as New Delhi seeks to rebuild trust in the Himalayan republic, where China has made deep inroads.

At a ceremony in Kathmandu, Modi and Oli pushed a button that opened the curtain on a plaque at the site of the 900 MW hydro-power project, formally marking the start of construction work there.

The project, which is expected to cost $1.04 billion and is being built by state-run Indian firm Satluj Jal Vidyut Nigam (SJVN) Limited, will be the single biggest foreign investment project in cash-strapped Nepal.

India has an open border with Nepal and tens of thousands of Nepalis work in India. The two countries share close religious and cultural bonds.

But India has been slow to implement projects despite ambitious plans, and it has also often been a target of Nepali politicians critical of what they see as meddling by their much bigger neighbor.

China, on the other hand, is pouring aid and investment into Nepali hospitals, roads and hydroelectric plants.

“As Nepal enters a new era of consolidating the gains of a democracy and achieving economic growth, India remains a steadfast partner,” Modi said on Twitter before his visit.

Project officials say they are in the final stages of agreement with the State Bank of India for investment of about 36 billion rupees ($535 million) for the Arun 3 project, with the rest coming from SJVN.

The project is moving forwards just as a Chinese proposal to build a 750 MW power plant in west Nepal has run into a roadblock. China’s Three Gorges International Corp is haggling for better terms, Nepali officials said.

“The power plant will provide employment, economic and business opportunities to Nepal,” Modi told reporters.