Cabinet approves revised cost of Bhutan hydel power project

The Cabinet today cleared the Revised Cost Estimate (RCE) of Rs 7,290.62 crore for the ongoing Hydroelectric Project (HEP) in Bhutan.
"The total cost escalation for the project, at this stage, is Rs 3,512.82 crore," said an official statement issued here after the Cabinet meeting chaired by Prime Minister Narendra Modi.
"This is a sign of further strengthening of relations between India and Bhutan," Law and IT Minister Ravi Shankar Prasad told reporters after the meeting.
India had announced support for Bhutan's infrastructure building, Prasad said, adding it will also get power from the hydel project.
The project will provide surplus power to India and thus augment power availability in the country and would enable project works to proceed smoothly without interruption.

The bilateral agreement to execute the Punatsangchhu-II HEP was signed between India and Bhutan in April, 2010 at the approved cost of Rs 3,777.8 crore with funding by New Delhi as 30 per cent grant and 70 per cent loan at 10 per cent interest to be paid back in 30 equated semi-annual instalments.
The factors behind cost escalation are due to inflation from March 2009 to March 2015, change in surface power house to underground power house, increase in capacity from 990 MW to 1020 MW, additional requirements due to Bhutan's National Transmission Grid Master Plan and adverse geological condition encountered during the project, the release said.