After 7 years, work restarts on India-funded Bhutan hydro project

New Delhi: Construction of Bhutan's 1,200-MW Punatsangchhu-I hydropower project has resumed after nearly seven years, with dam work restarting on Friday following a concrete pouring ceremony attended by Indian power minister Manohar Lal and Bhutan energy minister Gem Tshering.

India is funding the project with a 40% grant and 60% loan.

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The surplus power generated by the plant will be sold to India at a mutually determined price to be agreed at the time of project commissioning, according to India's power ministry.

Work in the area was affected by destabilisation of the right bank slope at the dam from 2013. The project was suspended in 2019.

Initial construction began in 2008 with a commissioning target of 2015, but repeated design changes and technical issues delayed progress.

The countries agreed in July 2025 to resume construction along with slope stabilisation measures after multiple studies and consultations.

As of February 2026, financial progress of the project was about ₹8,785 crore, or 93.7%, of the approved cost, while physical progress was nearly 88%.

The project is now expected to be completed within five years, subject to execution of dam construction and stabilisation works.

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Punatsangchhu-I is the largest hydropower project under construction in Bhutan and is expected to add about 30% to the country's installed capacity, taking it to nearly 4,700 MW.

The run-of-the-river project is designed to generate about 5,670 million units of electricity annually, with surplus power to be exported to India.