Cost of Punatsangchhu-II hydropower project in Bhutan nearly doubles to Rs7,290 cr

The union cabinet on Wednesday approved the revised cost estimate (RCE) of Rs7,290.62 crore for the ongoing 1,020 MW Punatsangchhu-II Hydroelectric Project (HEP) in Bhutan. The total cost escalation for the project, at this stage, is Rs3,512.82 crore.

The project will provide surplus power to India and thus augment power availability in the country and would enable project works to proceed smoothly without interruption.

India and Bhutan signed the agreement to execute the Punatsangchhu-II HEP in April 2010 at the approved cost of Rs3,777.8 crore (March 2009 price level) with funding by government of India as 30 per cent grant and 70 per cent loan at 10 per cent annual interest to be paid back in thirty equated semi-annual installments.

The cost escalation is mainly due to inflation from March 2009 to March 2015, change in surface power house to underground powerhouse, increase in capacity from 990 MW to 1,020 MW, additional requirements due to Bhutan's National Transmission Grid Master Plan and adverse geological condition encountered during the project, a power ministry statement disclosed.