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The Union Cabinet has approved a Revised Cost Estimate (RCE) of Rs 7,290.62 crore for the ongoing 1,020 Mw Punatsangchhu-II Hydroelectric Project (HEP) in Bhutan.
The total cost escalation for the project, at this stage, is Rs 3,512.82 crore, said a government statement.
The bilateral agreement to execute this project was signed between India and Bhutan in April, 2010 at the approved cost of Rs 3777.8 crore with funding by Government of India as 30 per cent grant and 70 per cent loan at 10 per cent annual interest to be paid back in thirty 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 1,020 Mw, additional requirements due to Bhutan's National Transmission Grid Master Plan and adverse geological condition encountered during the project.
