By NNN-PTI
Thimpu : India and Bhutan today crossed another milestone in bilateral economic relations by signing a defining agreement on setting up a new Rs 3,500 crore hydel project that will provide power to the South Asian giant.
Visiting External Affairs Minister Pranab Mukherjee and his Bhutanese counterpart Lyonpo Khandu Wangchuk inked the landmark agreement for the largest-ever hydel project to be built in the Himalayan Kingdom with Indian assistance.
The 1,095 mw Punatsangchu-I plant, a run-of-the river project, is expected to be completed in eight years to become yet another symbol of hydel power emerging as a key pillar in Indo-Bhutanese relations.
"The agreement is historic and takes mutually beneficial cooperation to greater heights," Mukherjee told reporters on the second day of this three-day official visit to the Himalayan Kingdom.
"The hydel projects are shining examples of initiatives for mutual benefit and prosperity of India and Bhutan".
The project that will augment the power availability in energy-starved India will be funded by the Indian government with 40 per cent grant and 60 per cent loan and also provides for erecting transmission lines up to the Indo-Bhutanese border.
With India committed to purchase 5,000 mw of power from Bhutan by 2020 under an agreement signed last year, Mukherjee said Detailed Project Reports (DPRs) are being prepared to construct two more hydel plants-Punatsangachu-II and Manaduchu.
India is already buying power generated from three projects built with Indian help. The projects including the Tala (1,020 MW) together account for 1,420 mw.