Union Cabinet approves the Revised Cost Estimate of Punatsangchhu-II Hydroelectric Project in Bhutan

The Union Cabinet has given its approval for Revised Cost Estimate (RCE) of 7290.62 crore rupees for the ongoing 1020 MW Punatsangchhu-II Hydroelectric Project (HEP) in Bhutan. The Hydroelectric project seeks to provide surplus power to India and thus augment power availability in the country. The approval of RCE would enable project works to proceed smoothly without interruption and the total cost escalation for the project after

RCE at this stage is 3512.82 crore rupees. Background India and Bhutan had signed a bilateral agreement to execute the Punatsangchhu-II HEP in April 2010. The project was approved cost of 3777.8 crore rupees with funding by Union Government as 30% grant and 70% loan at 10% annual interest. The main factors behind cost escalation were due to inflation from March 2009 to March 2015 and increase in capacity of HEP from 990 MW to 1020 MW. Besides, change in surface power house to underground power house and additional requirements of Bhutan’s National Transmission Grid Master Plan and adverse geological condition also escalated the cost.