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Hydro Electric Projects

28th July 2007

Bhutan Agreement between the Government of Republic of India and the Royal Government of Bhutan regarding the Punatsangchhu-I Hydro-Electric Project

Bhutan and India signed a landmark agreement on the implementation of the Punatsangchhu-I Hydro Electric Project.The agreement was signed at Gyelyong Tshokhang, Thimphu by Mr. Pranab Mukherjee, External Affairs Minister, on behalf of the Government of the Republic of India and Lyonpo Khandu Wangchuk, Foreign Minister on behalf of the Royal Government of Bhutan.

The Punatsangchhu-I project is a run-of-the-river scheme on the Punatsangchhu river located between 8.5 KM and 18.5 downstream of Wangduephodrang Bridge.The project will be funded by the Government of India with 40% grant and 60% loan an interest of 10%.The estimated capital cost of the project as per the DPR is Nu. 38,148.10 million (December 2006 price level).

The project envisages installed capacity of 1095 MW (6x182.50 MW) with annual average energy generation of 5377.45 GWH. The project will have 137 m high concrete gravity dam, 4 intakes, 4 underground desilting chambers, 7.50 Km long (10.3 m diameter) headrace tunnel and 2 vertical pressure shafts and an underground powerhouse.A new provision that would enable both Governments to benefit from Carbon Emission Revenue has also been introduced.

In accordance with the agreement, a Punatsangchhu Hydroelectric Project Authority will be set up for the construction of the project.The construction of the project is expected to commence in 2008 and complete by 2014.Pre-construction activities of the project have already started.

A Memorandum of Understanding (MoU) for the preparation of the Detailed Project Report (DPR) of the Punatsangchhu-I was signed between the two Governments on 15th September 2003.Accordingly the DPR was prepared by WAPCOS (India) Limited, a Government of India Undertaking and approved by both Governments in 2007.

In July 2006, an agreement on cooperation in the field of hydroelectric power was signed between the two Governments.Under this agreement, both countries have set out to achieve, inter alia, the export of a minimum of 5,000 MW of hydropower from Bhutan to India from 2020.

Cooperation between Bhutan and India has been highly successful and to the mutual benefit of both countries.Three hydroelectric power projects have already been commissioned in Bhutan with Indian assistance, namely, Chukha (336 MW), Kurichhu (60 MW) and Tala (1029 MW).Surplus power generated from the hydropower projects is exported to India.

Punatsangchhu-I will be the largest hydro power project to be undertaken in Bhutan in partnership with the Government of India and is yet another milestone in India-Bhutan cooperation in the field of hydropower.

Source: Indian Embassy to Bhutan, 2007
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