The development of the power potential of the river Punatsangchhu remained under consideration of the Royal Government of Bhutan (RGoB) for quite some time. In the Punatsangchhu basin, seventeen hydropower projects with a total capacity of 8,035 MW had been identified in the Power System Master Plan (PSMP) of Bhutan in 1993. Punatsangchhu-I and Punatsangchhu-II projects were selected for the formulation of PSMP-2003. Punatsangchhu-I is the first Project taken up under the 10,000MW by 2020 initiative in May 2008 by the RGoB and the Government of India (GoI). The other successfully implemented prestigious and mutually beneficial friendship ventures are Chukha HEP (336 MW), Kurichu HEP (60 MW), Tala HEP (1,020 MW) and Mangdechhu HEP (720MW).
The 1,200MW Punatsangchhu-I Hydroelectric project is presently the largest hydropower project under construction in the Himalayan Kingdom of Bhutan. The project is an environment-friendly, run-of-the-river scheme with its main components located on the left bank of the Punatsangchhu river in Wangduephodrang Dzongkhag. The project will utilize 357 m head available in a stretch of about 11 km along the river. The project components along the left bank are easily accessible from the Wangdue-Tsirang national highway on the right bank. With various project components located between 7 km and 21 km downstream of Wangdue Bridge, the Dam site is about 80 km from Thimphu. Paro, the international airport is about 110 km away. The nearest railway station is at Hasimara (West Bengal, India) on Siliguri-Alipurduar Broad Gauge line of NEF Railway of India. The project area can also be approached from Bagdogra Airport (near Siliguri, West Bengal, India) via Phuentsholing-Thimphu-Wangdue Highway (about 425 km) and also via, Gelephu-Tsirang-Wangdue highway.
The Bilateral Agreement between the Royal Government of Bhutan (RGoB) and Government of Republic of India (GoI) for implementation of the (1,095 MW latter revised to 1,200 MW), Punatsangchhu-I Hydroelectric project was signed on July 28, 2007 by H.E. Lyonpo Khandu Wangchuk, Hon’ble Minister for Economic Affairs on behalf of the Royal Government of Bhutan (RGoB) and H.E. Shri S.M. Krishna, Hon’ble Minister for External Affairs on behalf of the Government of India (GoI).
The project was sanctioned at a cost of INR/Nu. 35,148 million and is funded by the Government of India (GoI): 40% Grant and 60% Loan at 10% annual interest, repayable in 30 equated semi-annual installments commencing one year after the mean date of operation. The Government of India (GoI) shall be providing additional funds, as mutually determined, for the completion of the project, in the same proportion and on the same terms and conditions. All the surplus power from the project will be exported to India. The Project Authority shall be dissolved within two years after the commissioning and the project will be handed over to the Royal Government of Bhutan.
The “Constitution” of the Authority (drafted in line with the provisions of the Bilateral Agreement) was approved by the Authority in it’s first Meeting by the Royal Government of Bhutan (RGoB) on October 1, 2007.
The project implementation started on November 11, 2008 (Zero Date). The Foundation stone of the project was laid by H.E. Dr. Manmohan Singh, Hon’ble Prime Minister of lndia on May 17, 2008.