Union Water Resources Secretary Amarjeet Singh, who heads the committee, confirmed the investment clearance given to the project.
"The investment clearance committee has recommended the investment clearance for the project after detailed deliberations and discussions," he said.
The first-of-its-kind project covers parts of Madhya Pradesh and poll-bound Uttar Pradesh. Phase I of the project has received clearances from the National Board for Wildlife (NBWL), Tribal Affairs Ministry and lately from the Environment Ministry's EAC.
Also, the EAC's nod comes even as the project is being examined by Supreme Court appointed Central Empowered Committee (CEC) for adequacy of mitigative measures against its adverse impact on the Panna tiger reserve in Madhya Pradesh.
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The first phase of the project will cost about Rs 9,393 crore and is likely to be completed in nine years.
The project comes under Accelerated Irrigation Benefit Programme (AIBP) in which the Centre contributes 60 per cent funds and the rest is by the state. But the Water Resources Ministry has asked NITI Aayog to change the funding pattern to 90:10 ratio given it is a national project.
"We will follow whatever is the government's decision in this regard meanwhile (until the funding pattern is finalised)," sources in the ministry said.
The project envisages construction of a dam across river Ken in Chhatarpur district in Madhya Pradesh to irrigate 6.35 lakh hectares of land, serve drinking water purposes in Bundelkhand region and generation of 78 MW hydropower.
Of this, 3.69 lakh hectares will be covered in Madhya Pradesh's Chattarpur, Tikamgarh and Panna districts. The remaining 2.65 lakh hectares of area falls in poll-bound Uttar Pradesh's Mahoba, Banda and Jhansi districts.
The project comprises two powerhouses of 2x30 MW and 3x6 MW each, two tunnels of 1.9 km long at upper level, 1.1 km long tunnel at lower level and a 221 km long Ken-Betwa link canal, proposed on the left bank of the river.
The project was first mooted in the early 1980s but was actively taken up by the previous NDA government under then Prime Minister Atal Bihari Vajpayee. It was then challenged in the Supreme Court, which finally gave the nod in 2013.