010-i. Advisory review: EIA for Arun III hydropower project - Nepal

The NCEA issued an advisory review of an EIA report summary for the large-scale Arun III hydropower project in Nepal. It had various critical observations. Based on this and other information, the World Bank decided to withhold its funding and instead explore opportunities for small-scale water power projects.

Advisory reports and other documents

Significant details

The Nepal Electricity Authority planned to establish a 'run-off river' power plant in the Arun valley in East Nepal. This project would include the construction of a dam and reservoir, water pipelines, an electricity power station, and transmission lines. To facilitate construction work, an access road for construction traffic would also be built.

The World bank had been asked to provide a loan for this project. Undertaking an EIA is part of the standard assessment procedure for World Bank funding. An EIA report was therefore prepared for this project and compiled with other relevant studies in a Study Appraisal Report (SAR). This SAR would then be discussed by the World Bank's Board of Directors as a basis for the funding decision.

In order to form an opinion on the EIA report for this project, the Dutch government asked the NCEA to perform an advisory review of the report summary. The NCEA composed a working group including several fields of expertise, which reviewed this EIA summary against Dutch and international guidelines. It noted that reviewing a summary inevitably gives a limited view on the information in the complete EIA report. Nevertheless, it was able to make a number of observations, compiled under three main aspects:

• The application of EIA (a.o. the limited importance of environmental considerations in project selection, which was obviously driven by economic considerations);
• Local interests and local involvement (a lack of guarantees that benefits will be equally distributed over national and local needs, and lack of information on public participation in the project);
• Sustainability:
  • Environmental sustainability (lack of information on area and time covered, pollution and mitigation, risks of dam failure);
  • Social sustainability (lack of information on the socio-economic situation and project effects thereon);
  • Institutional sustainability (lack of information on institutional capacity, dimensions and funding of mitigation).

Based on this and other information, the World Bank decided to withhold its authorization for a loan and to investigate opportunities for small-scale exploitation of water power.

Parties involved

Members of the working group

Chair: Jacques de Smidt
Technical secretary: Reinoud Post

Proponent and Component Authority

Further details

Country: Nepal

Last modified: 10 May 2019