Saptakoshi is part of the inter-country Ganges River system, which drains through Bangladesh. The construction of the proposed 271m high dam over the Saptakoshi river system at Barahachhetra in Sunsari district in Nepal has the potential to develop 3500-4000MW of power as well as regulate the water flow in the Ganges river during the dry season.

India has been carrying out studies on the project since 1961 to save millions of its people in resident in the state of Bihar from floods originating in the Saptakoshi river, the largest river system of Nepal.

Recently, Nepal had agreed with India to carry out a detailed study on the dam and the work began in 2004.