Cabinet nod to Bhutan Hydro project

New Delhi, July 20 (UNI) In a move that would augment power supply to India the Cabinet today approved the signing of the proposed agreement between India and Bhutan for the 1,095 MW Punatsangchu-1 hydro power project, the second biggest in the Himalayan kingdom.

External Affairs Minister Pranab Mukherjee will visit the Himalayan kingdom shortly to formalise the Rs 3,514 crore project that would enable import of power to India, Information and Broadcasting Minister Priya Ranjan Dasmunsi said after the Cabinet meeting.

The Cabinet also approved the 400 KV Double Circuit Transmission lines from Project site to Indo-Bhutan border and related works.

Mr Dasmunsi said funding for the project to be at Rs 3,514.82 crore on agreed terms and conditions by the two governments, comprising Rs 1,405.92 crore equivalent to 40 per cent of the estimated cost to completion as grant and Rs 2,108.89 crore equivalent to 60 per cent of the estimated cost to completion as loan.

The loan shall carry an interest rate of 10 per cent per annum and shall be repayable in 12 equated annual instalments, the first repayment commencing from one year after the date of commercial operation.

There will be an additional budgetary support, over and above the estimated project cost of Rs 3,514.81 crore to cover the additional outflow on account of service tax (on actual basis).

The signing will also entail that the project should be under the Clean Development Mechanism (CDM) to generate carbon credits.

The project will provide surplus power to India and thus augment power availability in the country.

In addition, the project will contribute to our strategic objective of further integrating the economy of Bhutan with that of India.

The project is expected to be commissioned in seven years from the date of commencement.

Bhutan has a hydro-power potential of 30,000 MW, of which about 24,000 MW can be exploited. The Tala hydel project has been commissioned in collaboration with India.

Of the total power produced, nearly 75 per cent is imported by India.

While there has been progress in cooperation with Bhutan, including the MoUs for Hydro power project development, there is still scope to accelerate the process.

The 1,095 MW Punatsangchu I is a part of the 5,000 MW partnership that the two countries have agreed to.

UNI