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

The Union cabinet chaired by Prime Minister Narendra Modi  gave its approval for revised cost estimates of Rs 7,290.62 crore for the 1,020 MW Punatsangchhu-II Hydroelectric Project (HEP) in Bhutan.The total cost escalation for the project, at this stage, is Rs 3,512.82 crore.

The Hydroelectric project seeks to provide surplus power to India and thus augment power availability in the country.

  • The bilateral agreement to execute the Punatsangchhu-II HEP was signed between India and Bhutan in April, 2010 at the approved cost of 3777.8 crore (March 2009 price level) with funding by Government of India as 30% grant and 70% loan at 10% annual interest to be paid back in thirty equated semi-annual instalments. 
  • The factors responsible for cost escalation are: adjustment of inflation level to March 2015, changing the surface power house to underground unit, increase in capacity from 990 MW to 1020 MW, additional requirement due to Bhutan’s National Transmission Grid Master Plan and adverse geological condition encountered during the project.


  • Bhutan, a Buddhist kingdom on the Himalayas’ eastern edge, is a land of monasteries, fortresses  and dramatic topography ranging from subtropical plains to steep mountains and valleys.
  • Capital: Thimphu
  • King: Jigme Khesar Namgyel Wangchuck
  • Prime minister: Tshering Tobgay
  • Currencies: Bhutanese ngultrum, Indian rupee
  • Official language: Dzongkha

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