Work on Bhutan’s 1,200 MW Punatsangchhu-I hydropower project has resumed after a seven-year suspension, with Union Power Minister Manohar Lal Khattar attending a concrete pouring ceremony marking the restart of dam construction on April 10.
The revival of the India-funded project, stalled since 2019 due to geological challenges, is being seen as a major milestone in India-Bhutan energy cooperation. The project, located in Wangdue Phodrang, is expected to be completed within five years.
During his visit, the minister reviewed progress at the site and underscored the importance of the project, which is the largest bilateral hydropower venture between India and Bhutan. He highlighted India’s continued financial and technical support and the joint commitment to ensure safe and timely execution.
The Punatsangchhu-I project, a run-of-the-river scheme with an installed capacity of 1,200 MW, is expected to significantly boost Bhutan’s hydropower capacity by around 30 per cent to nearly 4,700 MW and generate about 5,670 million units of electricity annually. The surplus power will be exported to India at mutually agreed tariffs upon commissioning.
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Funded by India through a 40 per cent grant and 60 per cent loan, the project had achieved over 93 per cent financial progress and nearly 88 per cent physical completion as of February 2026 before work resumed. The original project cost was pegged at Rs 9,375.57 crore (December 2013 price level), with a revised estimate currently under review.
Construction began in November 2008 and was initially scheduled for commissioning in 2015. However, the project encountered significant geological issues, including destabilisation of the right bank slope in 2013, leading to design changes and eventual suspension of dam works in 2019.
Following extensive studies and deliberations, both governments agreed on July 31, 2025, to resume construction along with slope stabilisation measures. The restart marks a crucial step in reviving the long-delayed project.
During the visit, Manohar Lal also reviewed operations at the Punatsangchhu-II project, jointly inaugurated in November 2025 by Prime Minister Narendra Modi and Bhutan’s King Jigme Khesar Namgyel Wangchuck, which is already generating electricity and exporting power to India.
The minister also visited the historic Wangdue Phodrang Dzong during his trip.
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