Nepal's government says it is signing an agreement with an Indian company to build a $1.04 billion hydroelectric plant in the Himalayan nation's east, along the Arun River.
Nepal's Law Minister Narahari Acharya said the deal will be signed after Indian Prime Minister Narendra Modi arrives for a South Asian heads of state regional summit that starts in Kathmandu Wednesday.
The project is expected to begin producing electricity in 2020. Under the agreement, Nepal will get a fifth of the electric power free of charge.
According to industry analysts, power shortages are so severe in Nepal that electricity supplies can be out for up to 12 hours a day. The existing hydro power plants are not able to handle demand even during the monsoon season when lake and river levels are high.