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Construction of the 1,200 MW Punatsangchhu-I hydropower project in Bhutan has resumed after a nearly seven-year halt caused by geological issues affecting dam stability. The restart was marked by a concrete pouring ceremony attended by India's Power Minister Manohar Lal. The India-funded project, located in Wangdue Phodrang, is expected to be completed within five years and will significantly enhance Bhutan's hydropower capacity by around 30 per cent. With over 93 per cent financial and nearly 88 per cent physical progress achieved prior to suspension, the project underscores continued India-Bhutan cooperation in energy infrastructure and cross-border electricity trade.
Construction of the 1,200 MW Punatsangchhu-I hydropower project in Bhutan resumed on April 10 following a prolonged suspension since 2019, with Manohar Lal attending a concrete pouring ceremony marking the restart of dam works in Wangdue Phodrang. Advertisement
The project, which is the largest India-funded hydropower venture in Bhutan, had been halted due to significant geological challenges, particularly the destabilisation of the right bank slope at the dam site. After a series of technical studies and bilateral discussions, the governments of India and Bhutan agreed in mid-2025 to resume construction alongside slope stabilisation measures.
Punatsangchhu-I is a run-of-the-river hydropower project with an installed capacity of 1,200 MW and is expected to increase Bhutan's total hydropower capacity by approximately 30 per cent, taking it to nearly 4,700 MW upon completion. The project is also projected to generate around 5,670 million units of electricity annually, with surplus power to be exported to India under mutually agreed tariffs.
Funded by India through a combination of 40 per cent grant and 60 per cent loan, the project had already achieved substantial progress before the suspension. As of February 2026, financial progress stood at INR 8,785.19 crore, accounting for 93.7 per cent of the approved cost of INR 9,375.57 crore at 2013 price levels. Physical progress had reached approximately 87.75 per cent.
The construction work had originally commenced in November 2008, with an initial commissioning target of November 2015. However, execution delays emerged due to complex geological conditions encountered during both surface and underground works, necessitating multiple design revisions. The situation worsened following slope instability issues identified in 2013, ultimately leading to the suspension of dam construction in 2019.
During his visit, the minister also reviewed operations at the Punatsangchhu-II project, which was jointly inaugurated in late 2025 by Narendra Modi and Jigme Khesar Namgyel Wangchuck. The second project is already operational and generating electricity, including exports to India, contributing to Bhutan's revenue generation.
Officials indicated that the resumption of work on Punatsangchhu-I is expected to facilitate project completion within the next five years, subject to progress on engineering stabilisation measures and construction activities. A revised cost estimate for the project is currently under examination, reflecting changes arising from delays and additional technical requirements.
The project remains a key component of India-Bhutan energy cooperation, with both countries continuing to collaborate on infrastructure development aimed at enhancing regional energy security and cross-border electricity trade.
Source - PTI
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