We acknowledge receipt of your recent communication concerning the Upper Arun Hydroelectric Project (UAHEP) and appreciate your engagement on matters related to human rights and development.

After a careful review of the referenced report, we respectfully disagree with several of its conclusions and allegations. The report appears to rely heavily on anecdotal accounts, selective interviews, and references to unrelated projects, rather than presenting a balanced, evidence-based analysis. While we fully support the right to raise concerns, it is important that such reports be grounded in verified information, avoid unilateral narratives, and accurately reflect the broader context.

Clarification on Free, Prior and Informed Consent (FPIC)

The report's claim that UAHEP has fallen short in obtaining Free, Prior and Informed Consent (FPIC) from the affected Indigenous Peoples (IPs) is inaccurate. In fact, UAHEP is the first publicly financed infrastructure project in Nepal to have secured FPIC in full compliance with the World Bank’s Environmental and Social Framework (ESF).

To ensure transparency and credibility, UAHEL engaged the Nepal Federation of Indigenous Nationalities (NEFIN), a nationally recognized and independent Indigenous Peoples’ organization to lead the FPIC process. The process was closely observed and monitored by the World Bank to ensure adherence to international standards. A three member Environmental and Social Panel of Experts (ESPOE) comprising of world renowned international experts, appointed with approval from the World Bank provided guidance and an independent review of the process.

Between 2019 and 2022, NEFIN conducted three structured rounds of consultations across 22 Indigenous villages. This inclusive effort was supported by a 158-member Adivasi Janajati Advisory Council (AJAC) and a 44-member Working Group with equal gender representation. All engagement activities were conducted in a culturally appropriate manner, with full disclosure and prior distribution of materials in local languages. Community feedback was transparently documented and incorporated into the Indigenous Peoples Plan (IPP).

The FPIC process formally concluded in December 2022 with the signing of three consent documents by AJAC members, local government representatives, and UAHEL. As part of this agreement, UAHEL committed NPR 550 million over five years toward IPP implementation across sectors including cultural preservation, economic and infrastructure development, and capacity building, along with an additional NPR 50 million for administrative support.

We would also like to clarify that Environmental Impact Assessment (EIA) approval is a separate legal requirement under Nepali law and should not be construed as a substitute for FPIC.

Clarification on Land Acquisition and Compensation

It is equally important to distinguish FPIC from the land acquisition and compensation process, which is governed separately by Nepal’s Land Acquisition Act, 2034. Compensation was determined by a legally constituted Compensation Determination Committee (CDC), which included local government representatives and local community representatives and conducted field verification of affected land and assets.

Compensation rates were based on prevailing market values and determined through multiple rounds of consultation and negotiation with local stakeholders. Given the challenging terrain and remoteness of the project area, the compensation provided was considered relatively high. While financial compensation cannot replace the cultural and emotional value of ancestral land, most affected families have expressed satisfaction with the compensation received. This process was lawful, participatory, and independent of the FPIC consultations. This lawful and participatory process is distinct from the collective FPIC consultations and the observers from the World Bank (WB) were also satisfied with the process as the process was in compliance with WB ESF 2018.

Commitment to Inclusive Development and Benefit Sharing

UAHEP is committed not only to mitigating impacts but also to enhancing the long-term socio-economic well-being of Project-Affected Persons (PAPs). In addition to the IPP, a comprehensive Benefit Sharing Framework (BSF) has been established, which includes:

• Community Support Programs (CSP)
• Local equity share opportunities with financial literacy training
• Corporate Social Responsibility (CSR) funding
• Skill-based training and livelihood development programs

These initiatives go beyond compensation to foster inclusive growth, address long-standing development gaps, and reflect a structured, good-faith approach to community participation.

Concern about Misattributions

We are concerned that the report appears to conflate issues from unrelated projects, resulting in misattributions that do not reflect the context or practices of UAHEP. Such inaccuracies undermine constructive dialogue and public understanding.

Conclusion

UAHEP remains firmly committed to transparency, Indigenous rights, and meaningful community engagement throughout the project lifecycle. While we welcome constructive feedback and open dialogue with civil society, we respectfully request that future assessments of UAHEP be conducted with due diligence, fairness, and factual accuracy.