Construction on the 1,200 MW Punatsangchhu-I hydropower project in Bhutan has resumed after nearly seven years, with the start of dam concrete work marking a major milestone in reviving one of India’s largest cross-border energy projects.
The restart was formalised during a concrete pouring ceremony attended by Union Power Minister Manohar Lal, who visited the project site during his official trip to Bhutan. The ceremony “mark[s] a significant milestone in the development of the project,” the government said, signalling the resumption of stalled construction.
“After almost seven years… work on the 1,200-megawatt Punatsangchhu-I Hydroelectric Project… has resumed with the commencement of the dam construction,” according to the ministry of power.
The project had been on hold since 2019 following major geological challenges, including destabilisation of the right bank slope, which required extensive redesign and stabilisation measures before work could restart.
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Overcoming Geological Hurdles
Following detailed studies and bilateral consultations, India and Bhutan agreed in July 2025 to resume construction along with slope stabilisation, paving the way for the revival of the project.
Despite the prolonged delay, the project has achieved 87.75% physical progress and 93.7% financial progress as of February 2026, with expenditure at ₹8,785.19 crore against an approved cost of ₹9,375.57 crore (December 2013 price level).
A revised cost estimate is currently under examination by the Central Electricity Authority (CEA) and the Central Water Commission (CWC), with experts indicating that the final project cost could increase by around ₹5,000 crore due to delays and design changes.
Financial Scaling
Described as the largest joint hydropower venture between India and Bhutan, the project is expected to significantly boost Bhutan’s hydropower capacity and strengthen bilateral energy cooperation.
Once completed, the project will generate 5,670 million units (MU) of electricity annually and increase Bhutan’s installed hydropower capacity by nearly 30% to around 4,700 MW.
The project is being funded by the Government of India under a 40% grant and 60% loan model, with surplus electricity to be exported to India at mutually agreed tariffs.
During the visit, the Union Minister reviewed progress and “emphasized the long-standing partnership in the energy sector,” noting India’s continued financial and technical support and commending joint efforts to advance the project.
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Originally scheduled for commissioning in 2015, the project’s timeline was pushed back due to repeated geological setbacks, making the latest restart a key turning point.
The project is now expected to be completed within the next five years, subject to successful execution of dam construction and slope stabilisation works.
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