New Delhi, Feb 22 (IANS): A cabinet panel on Wednesday approved a 900 MW hydro-electric project to be set up in Sankhuwasabha district of Nepal at a cost of Rs 5,723.72 crore.

"The Cabinet has approved today (Wednesday) an investment proposal for setting up the ARUN-3 hydro electric project in Nepal by SJVN Ltd," Power Minister Piyush Goyal told reporters here following a meeting of the Cabinet Committee on Economic Affairs (CCEA).

"ARUN-3 will generate 900 MW of hydro power," he said.

"The project is expected to achieve financial closure by September this year. The project will be implemented within five years," he added.

The project is being implemented by a wholly-owned subsidiary of state-run Satluj Jal Vidyut Nigam (SJVN), which is a joint venture between the Centre and Himachal Pradesh.

"SJVN Ltd. bagged the project through international competitive bidding," a CCEA communique said.

An MoU was signed between the Nepal government and SJVN for the project in March, 2008.

The project is located in the Sankhuwasabha district of eastern Nepal.