Work on Bhutan's 1,200 MW Punatsangchhu-I hydropower project has resumed after a seven-year suspension, with India's Power Minister Manohar Lal attending a key concrete pouring ceremony marking the restart of dam construction.

The revival of the India-funded project, stalled since 2019 due to geological challenges, is seen as a major milestone in bilateral energy cooperation and is expected to pave the way for completion within five years.

According to an official statement, Manohar Lal, during his visit to Bhutan, visited the project site, which is the largest joint hydropower venture between the two countries and is expected to enhance Bhutan's hydropower capacity substantially upon completion.

The Minister attended a concrete pouring ceremony at Punatsangchhu-I on April 10, signalling the restart of dam construction, which had been suspended since 2019 due to geological challenges. The project, Bhutan's largest hydropower venture funded by India, is expected to be completed within five years.

The Minister said the project reflects strong India-Bhutan energy cooperation, highlighting India's financial and technical support and the joint efforts to advance construction safely.

At the Punatsangchhu-II project, jointly inaugurated in November 2025 by Prime Minister Narendra Modi and Bhutan's King Jigme Khesar Namgyel Wangchuck, he reviewed operations, noting it is already generating electricity and revenue, including exports to India.

Punatsangchhu-I, a run-of-the-river project with an installed capacity of 1,200 MW, is expected to boost Bhutan's hydropower capacity by about 30% to nearly 4,700 MW and generate around 5,670 million units annually.

Funded by India with a 40% grant and 60% loan, the project had reached over 93 per cent financial progress and nearly 88 per cent physical completion as of February 2026 before work resumed.

The project was approved at a cost of ₹9,375.57 crore (December 2013 price level). As of February 2026, financial progress stood at ₹8,785.19 crore, or 93.7%, while physical progress was 87.75%. A revised cost estimate is currently under examination.

The minister also visited the historic Wangdue Phodrang Dzong during his trip.

The surplus power generated by the PHEP-I will be sold to India at a mutually determined price, to be agreed at the time of project commissioning.

Construction on the project commenced on November 11, 2008, with an initial commissioning schedule of November 2015. However, during execution, the project faced significant geological challenges in surface and underground works, leading to numerous design changes.

The dam works were adversely affected by the destabilisation of the right bank slope at the dam in 2013, leading to the suspension of ongoing dam works from 2019.

The two governments and the agencies involved deliberated on the issues during several meetings and through studies. On July 31, 2025 the two governments agreed to resume dam construction and stabilising the right-bank slope.

After almost seven years, on April 10, 2026 the work on the 1,200-megawatt Punatsangchhu-I project in Wangdue Phodrang resumed with the commencement of the dam construction.

Minister of Power, Housing and Urban Affairs Manohar Lal and Bhutan's Minister of Energy and Natural Resources, Gem Tshering, attended the concrete pouring ceremony - marking a significant milestone for this massive project. The main dam construction work was halted in 2019 due to major geological challenges.