India government approves power agreement with Bhutan

New Delhi, July 20: Government of India has approved the proposed agreement with Bhutan for a 1,095-megawatt hydropower project and a 400 KV Double Circuit Transmission lines from Project site to Bhutan-India border and related works Friday.

A cabinet meeting chaired by Prime Minister Manmohan Singh approved the Rs.35.14 billion Punatsangchhu-I Hydropower Project for which 40 percent of the total cost will be in the form of grant and the remaining as loan, the Public Information Bureau stated in a press release.

The loan has been given at 10 percent per annum interest rate which will be repaid in 12 equal annual installments. The first repayment of the loan would be made after one year of commencing the date of commercial operation.

External Affairs Minister Pranab Mukherjee has been given the authority to finalize the agreement after visiting Bhutan.

The Project will provide surplus power to India and thus augment power availability in the country. In addition, the project will contribute to our strategic objective of further integrating the economy of Bhutan with that of India.

The Project is expected to be commissioned in 7 years from the date of commencement. Bhutan News Service