Punatsangchhu-II Hydropower Project

The Punatsangchhu-II Hydropower Project (PHPA-II) is a 1,020 megawatt run-of-the-river hydroelectric scheme on the Punatsangchhu river in Wangdue Phodrang dzongkhag. It is located downstream of Punatsangchhu-I and was developed by the Punatsangchhu-II Hydroelectric Project Authority under an inter-governmental agreement between the Royal Government of Bhutan and the Government of India signed in 2010.^[1]

Construction began in 2010 with an originally projected completion date of 2018. Like its upstream counterpart, the project experienced delays during construction, but on a less severe scale than PHPA-I. The first two of the project's six 170 MW units were synchronised with the grid in December 2024, and successive units came online over the following months. Unit 5 was synchronised in mid-2025 and the final unit was connected to the grid in August 2025, completing commissioning at full capacity.^[2]

PHPA-II adds approximately 40 percent to Bhutan's previously installed hydropower capacity and is the second-largest power station in the country after the 1,020 MW Tala plant. Surplus power is sold to India under a long-term power purchase agreement, with the project operated by a successor entity within the Druk Green group.

Design and financing

PHPA-II is a run-of-the-river scheme. Water is diverted by a 91-metre-high concrete gravity dam, conveyed through a 14.6-kilometre headrace tunnel, and dropped to an underground powerhouse housing six Francis-turbine generating units rated at 170 MW each. Annual generation at design flow is projected at around 4,357 GWh.

The project is financed by the Government of India on terms of 30 percent grant and 70 percent loan, with the loan carrying 10 percent annual interest and repayable in 30 equated semi-annual instalments commencing one year after the mean date of commissioning. The total approved cost was Rs 37,778 million (approximately Nu 37.8 billion at the time of approval), although as with most Bhutanese hydropower projects this figure has been revised upward during construction.^[3]

Construction

Civil works on the dam, headrace tunnel and powerhouse complex were carried out by Indian and joint Indo-Bhutanese contractors, with electromechanical equipment supplied principally by Bharat Heavy Electricals Limited (BHEL) of India. The project encountered geological challenges of its own, including issues with rock support in the headrace tunnel and water seepage, but did not suffer the kind of large slope failure that has affected PHPA-I.^[4]

The Bhutanese Ministry of Energy and Natural Resources marked the start of testing and commissioning of Units 1 and 2 with a public announcement in late 2024, attended by senior officials from both governments. Subsequent unit commissioning was reported in regular bulletins from the Punatsangchhu-II Project Authority and the Consulate General of India in Phuentsholing.^[5]

Power export and operating status

As with earlier joint projects, surplus electricity from PHPA-II is exported to India through the eastern regional grid under a long-term power purchase agreement. The Royal Government of Bhutan retains ownership of the plant, while operational management is transferred to Druk Green Power Corporation following commissioning.

Indian and Bhutanese statements at the time of full commissioning in August 2025 emphasised the contribution of the project to Bhutan's clean energy export earnings and to the integrated South Asian electricity market. The South Asia Subregional Economic Cooperation programme noted that with PHPA-II fully operational, Bhutan's installed hydropower capacity passed 3,500 MW.^[6]

Comparison with PHPA-I

The two Punatsangchhu projects were originally conceived as a paired upstream-downstream development on the same river basin and were launched within two years of each other. Their subsequent histories have diverged sharply. PHPA-II reached commissioning roughly six to seven years behind its original schedule but with comparatively limited cost escalation; PHPA-I, by contrast, has been delayed by more than fifteen years and has seen costs more than double from initial estimates because of slope-stability problems on the right bank above the dam.

The contrast has been the subject of analytical commentary in Indian and Bhutanese media and in regional energy think-tanks, which have used the two projects to discuss site selection, geological due diligence and risk allocation in cross-border hydropower cooperation.^[7]

References

1. Overview of the Project — PHPA-II official website
2. Synchronization of Unit 5 of 1020 MW Punatsangchhu-II — Consulate General of India, Phuentsholing
3. Hydroelectric Projects — Embassy of India, Thimphu
4. First two turbines operating at Punatsangchhu-II — Renewable Energy World
5. Commencement of Testing and Commissioning of Unit 1 and 2 — Ministry of Energy and Natural Resources, Bhutan
6. Fully Commissioned: Punatsangchhu-II Hydropower Project — SASEC
7. 1,020 MW Punatsangchhu-II to enhance Bhutan's power generation capacity by 40 percent — Gulf News