Punatsangchhu-I Hydropower Project

The Punatsangchhu-I Hydropower Project (PHPA-I) is a 1,200 megawatt run-of-the-river hydroelectric scheme on the Punatsangchhu river — the lower reach of the combined Mo Chhu and Pho Chhu — in Wangdue Phodrang dzongkhag. The project is being built by the Punatsangchhu-I Hydroelectric Project Authority under an inter-governmental agreement between the Royal Government of Bhutan and the Government of India signed in 2007. Construction began in 2008 with an original target completion date of 2015.^[1]

The project has become the most prominent example of cost and schedule difficulties in Bhutan's hydropower programme. Repeated geological problems on the right bank above the dam axis have stalled completion of the dam wall, and the scheme is now expected to be commissioned no earlier than 2030. The estimated cost has risen from an initial figure of around Nu 35 billion to a Bhutanese government estimate of Nu 93.76 billion (approximately US$1.13 billion), with associated implications for Bhutan's sovereign debt and for the bilateral hydropower model with India.^[2]

Despite the difficulties, PHPA-I remains under active construction. Main dam works resumed in 2024 after a multi-year suspension, and the scheme continues to be presented by both governments as a strategic component of long-term energy cooperation between Bhutan and India.

Design and financing

PHPA-I is designed as a run-of-the-river project, with a 136-metre-high concrete gravity dam at Dzomling, a head race tunnel of about 9 kilometres, and an underground powerhouse near Wangdue Phodrang town housing six generating units of 200 MW each. Annual generation at full capacity is projected at around 5,700 GWh.

The project is financed by the Government of India on terms of 40 percent grant and 60 percent loan, with the loan extended at 10 percent annual interest and repayable in 30 equated semi-annual instalments after commissioning. The inter-governmental agreement vests ownership of the asset in the Royal Government of Bhutan and assigns operational responsibility to a successor entity within the Druk Green group. As with earlier joint projects, surplus power is to be sold to India under a long-term power purchase agreement.^[3]

Geological problems and right-bank slope failure

From early in construction the right bank of the dam site, on the east-facing slope above the river, showed signs of slow downslope movement. A large failure occurred in July 2013, when several million cubic metres of soil and rock material moved on the slope above the dam, halting work in that sector. Further slope movements were recorded in 2016 and again in January 2019, after which main dam construction was suspended.^[4]

A 2020 study published in Scientific Reports using multitemporal Synthetic Aperture Radar interferometry (DInSAR) found that the affected area of the slope had been moving since at least 2007 and that the active deformation zone had continued to expand through 2018, despite stabilisation works begun in 2013. The authors interpreted the slope as part of an older, previously unrecognised landslide complex, and concluded that toe undercutting during dam excavation had reactivated movement on the larger feature.^[5]

Stabilisation measures undertaken since 2013 have included the construction of large concrete buttresses, drainage galleries, slope reinforcement and rock anchors, designed in consultation with international geotechnical consultants. The cumulative cost of these works is one of the principal drivers of the project's overall cost increase.

Cost and schedule revisions

The project was approved in 2008 at an estimated cost of around Nu 35 billion and a construction period of 75 months. Successive revisions of the cost estimate and timeline have followed each major slope event. Indian and Bhutanese sources have reported revised figures rising from around Nu 50 billion in 2014 to Nu 72 billion in 2017 and to Nu 93.76 billion in the most recent revision approved by the Royal Government of Bhutan.^[6]

The Bhutanese press, including BBS, Kuensel and The Bhutanese, has reported on the implications of the cost overrun for the country's sovereign debt position. External commentary in Dialogue Earth and the Wire has linked the PHPA-I delays to broader concerns about Bhutan's ability to meet its medium-term hydropower export goals and to wider questions about the geopolitics of South Asian energy cooperation.^[7]

Resumption of work

In 2024 the Punatsangchhu-I Project Authority announced the resumption of main dam construction, after engineering reviews indicated that the modified design — incorporating a deeper foundation, redesigned right-bank works and additional slope monitoring — could be safely completed. Press reports in 2024 indicated that the dam is now expected to be completed by 2030, with first power generation following thereafter.^[8]

The Bhutanese authorities and the Government of India have continued to characterise the project as an essential element of the bilateral energy partnership. The episode has nonetheless prompted debate within Bhutan about the appropriate balance between large state-funded mega-projects, smaller domestic hydropower schemes, and alternative renewable sources.

References

1. Punatsangchhu-I resumes main dam construction after geological challenges — BBS
2. What Bhutan's failed hydropower goal means for energy geopolitics — Dialogue Earth
3. Hydroelectric Projects — Embassy of India, Thimphu
4. Punatsangchhu I: identifying ancient landslides — AGU Landslide Blog
5. The Punatsangchhu-I dam landslide illuminated by InSAR multitemporal analyses — Scientific Reports 10, 8304 (2020)
6. Bhutan DRP 2023: Uncertain Fate of Mega Hydro — SANDRP
7. Bhutan's Hydropower Goal and the Geopolitics of Energy — The Wire
8. Work resumes on Bhutan's 1,200 MW Punatsangchhu-I — PropNewsTime