India allocates additional funds for Bhutan’s 1,200-MW Punatsangchu 1 hydropower project

The government of India has reserved about US$286 million for interim cost escalations associated with the development of Bhutan’s 1,200-MW Punatsangchu 1 hydropower project.

According to Bhutan’s Ministry of Foreign Affairs, the reserve is expected to be made available by India in April. reported that India’s Union Cabinet had approved an intergovernmental agreement to assist with the Punatsangchu 1 plant in July 2007, at which point the cabinet allocated funds for a $328 million grant and a $492 million loan.

India’s Water and Power Consultancy Services performed the detailed project report on the run-of-river project. A feasibility study by Japan’s Electric Power Development Co. outlined a 141-meter-tall diversion dam, two 7-kilometer-long headrace tunnels, and an underground powerhouse with a head of 310 meters, and two 350-meter-long tailrace tunnels.

The project will provide surplus power to India via 400-kilovolt double-circuit transmission lines, according to preliminary studies.

Bharat Heavy Electricals Limited (BHEL) announced it had won an award to supply electro-mechanical equipment for the project in February 2010.

Punatsangchu 1 is one component of a plan announced by Bhutan in June 2008 to increase its cumulative hydropower output to 6,000 MW by 2020.

Other plants include the 600-MW Kholongchhu, 570MW Wangchhu, 770MW Chamkharchhu and 180MW Bunakha, which could also become India/Bhutan joint venture projects per a draft intergovernmental agreement also submitted for review this week.

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Michael Harris formerly was Editor for

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