Cabinet okays Mangadechhu project's revised cost

The union cabinet on Wednesday approved the revised cost estimate (RCE) of Rs.4,020.63 crore for the ongoing 720 MW Mangadechhu hydroelectric project in Bhutan.

The project will provide surplus power to India as well as augment power availability in the country.

"The fast RCE approval will enable the work on the project to proceed smoothly without interruption," an official said.

The bilateral agreement to execute the Mangdechhu project was signed between India and Bhutan in April, 2010 at the approved cost of Rs.2,896 crore with funding by the Indian government as 30 percent grant and 70 percent loan at 10 percent annual interest to be paid back in 30 equated semi-annual instalments.

"The total cost escalation for the project, at this stage, is Rs.1,124.36 crore," the official added.

The factors behind cost escalation were inflation from March 2008 to March 2014, construction of cut-off wall against permeation grouting upstream coffer dam, exchange rate variations and other causes, officials said.