The 1,200 MW Punatsangchhu-I Hydropower Project (PHPA-I), one of Bhutan’s most ambitious infrastructure undertakings, is finally moving ahead after years of delays and setbacks. Following over 11 years of extensive deliberations and more than 30 technical co-ordination committee (TCC) meetings, Bhutan and India have reached a consensus to resume the dam’s construction, with essential stabilisation measures for the landslide-affected right bank.
This progress comes after a period of uncertainty that cast doubt on the project’s future. The landslide on the right bank, which halted construction indefinitely, was a major blow. Several rounds of geo-technical studies were conducted to assess the situation and two possible solutions were put forward: either building a dam or constructing a barrage to stabilise the site and move the project forward. After careful deliberation, the governments have chosen to press ahead with dam construction, an indication of the importance both nations place on the project’s success.
PHPA-I was conceived as a symbol of Bhutan’s economic self-reliance and a testament to our longstanding partnership with India. Signed in July 2007 under a bilateral agreement, the project was designed to bolster Bhutan’s hydropower capacity while contributing to India’s growing energy needs. Construction began in November 2008 with high hopes, but the project has since faced continuous delays, most notably due to the landslide. These setbacks have significantly inflated the project’s costs, which now stand at a staggering Nu 100 billion—nearly three times the initial estimate of Nu 35 billion. To date, approximately Nu 86 billion has already been spent, yet much remains to be completed.
The cost overruns and delays are certainly concerning. For a country like Bhutan, where hydropower is the cornerstone of economic development, the stakes are high. Hydropower is not just an energy source—it is a lifeline for the economy, providing critical revenue through electricity exports, primarily to India. PHPA-I was supposed to be a flagship project, reinforcing Bhutan’s position as a major hydropower producer in the region. However, the repeated delays and mounting costs threaten to overshadow the benefits that the project could bring.
One cannot help but question whether the long-term viability of PHPA-I has been compromised. With the ever-increasing costs, how will Bhutan and India manage the financial burden? There are lessons to be learned here, especially when it comes to large-scale infrastructure projects in geologically challenging areas. More robust risk assessments and contingency planning should be integral to future hydropower projects to avoid the pitfalls that have beset PHPA-I.
Looking ahead, the key to salvaging this project lies in ensuring that the next phase of construction proceeds smoothly, without further complications. The stabilisation measures for the right bank must be implemented with the utmost care, backed by continuous monitoring and technical oversight. Given the significant financial investment already made, there is little room for further errors. Both governments must stay committed to seeing the project through to completion, not only to safeguard their financial stakes but also to maintain public confidence in hydropower as a viable and sustainable economic driver.