The project will provide a valuable addition of peaking power to India’s Northern Grid, which faces severe power shortages at high-consumption times. The electricity generated from the project – estimated at 1665MkWh per year – will be supplied to the states of Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Chandigarh, Delhi and Jammu & Kashmir.

The World Bank financing will help build project infrastructure that includes a 65m diversion dam near Helang village in the Chamoli district of Uttarakhand to create a small reservoir in the Alaknanda River, a 13.4km headrace tunnel to carry the water to an underground powerhouse near Haat village and a 3km-tailrace tunnel that will take all the diverted water back to the river.

According to a statement from the government there will be negligible impact on downstream water quality as a result of the project and THDC will ensure that there is a minimum flow of 15.65m3/sec of water in the Alaknanda at all times to sustain the aquatic health of the river. This is equivalent to approximately 45% of the average lean season flow in the Alaknanda and represents one of the highest minimum flow standards maintained by any hydropower project in India.

Located on a section of the Alaknanda where it flows through a deep, largely uninhabited gorge, the project is also expected to have minimal negative impacts on the local communities and the environment. Detailed social and environmental impact assessments, conducted after consultations with local communities and experts, have confirmed that these impacts are manageable with identified measures, said the statement.

The loan agreement was signed on 10 August by Shri Venu Rajamony, Joint Secretary, Department of Economic Affairs, on behalf of the Government of India; Shri R.S.T. Sai, CMD, THDC; Shri S.D.Sharma, Additional Resident/Investment Commissioner on behalf of the Government of Uttarakhand and Mr Roberto Zagha, Country Director for India on behalf of the World Bank.