It is located near Dharmahama Village, 5 km (3 mi) north of Bandipore in the Kashmir valley and has an installed capacity of 330 MW.

In December 2013, the Court ruled that India could divert water for power generation while ensuring a minimum flow of 9 cumecs (m3/s) downstream to Pakistan.

The tunnel is received by a surge chamber before sending water to the underground power house which contains 3 x 110 MW Pelton turbine-generators.

[9] The dam is equipped with a lower level orifice spillway to transfer flood water as well as silt downstream to protect the power generation reliability and the operating life of the project.

[10] The arbitration award permitted the lower level orifice spillway as envisaged by India but prohibited the depletion of dead storage.

Under the treaty, India is obliged to inform Pakistan of its intent to build a project six months prior to construction and take into account any concerns raised by the latter.

John Briscoe, a former World Bank water expert, points out that the "far-sighted Indian and Pakistani engineers" who drafted the treaty very well anticipated the situation.

[14][note 1] Unable to agree with India, Pakistan raised a 'dispute' under the Indus Waters Treaty, asking the World Bank to assemble a Court of Arbitration.

But it also concluded that the treaty and the customary international law required India to ensure a minimum environmental flow along the Kishanganga/Neelum riverbed.

Balancing this figure against India's right to the satisfactory operation of its project, it set down 9 cumecs as the required minimum flow to be ensured at all times.

Pakistan also raised another dispute at the same Court of Arbitration, questioning India's plan to use drawdown flushing for clearing the sediments that accumulate below the 'dead storage' level.

[23] The previous Salal project on the Chenab river was constructed without drawdown flushing facility and the dam is said to have filled up with sediment within two seasons.

[25] In the event of a war or conflict, India would have the ability to flood the downstream areas by using the drawdown facility and then shut off water while refilling the reservoir.

[29] The court read the treaty's provisions regarding depletion and the limits on live storage as restricting India's ability to manipulate flows.

The CoA also declared that it is competent enough as per provisions of the Indus Water Treaty to decide on all the technical issues that are in the domain of the NE (paras 483 to 491).

Albeit, Neutral Expert (NE) is to be appointed when India or Pakistan asks accordingly irrespective of differences or disputes (technical or legal issues).

The World Bank was faced with conflicting demands from the two parties and called for a "pause" in December 2016 asking India and Pakistan to agree on a course of action.

As acknowledged by the CoA (paras 507 to 509), the low-level orifice outlets, as permitted by Annexure D (8d) of the Treaty, are also needed to pass the probable maximum flood, to release water in the event of an unforeseen emergency and for sediment control by sluicing without depleting the dead storage.

Using tunnel boring in the young Himalayan mountains and the adverse climate in winters posed considerable challenges to the construction team.

[39][40][41][42] Indian Prime Minister Narendra Modi inaugurated the Kishanganga power plant in the state of Jammu and Kashmir on 19 May 2018.

The 330MW Kishanganga hydropower station, work on which started in 2009, is one of the projects that India has fast-tracked in the volatile state amid frosty ties between the nuclear-armed countries.

Pakistan has opposed some of these projects, saying they violate a World Bank-mediated treaty on the sharing of the Indus River and its tributaries upon which 80 percent of its irrigated agriculture depends.

[21] The CoA verdict (page 43) also made provision to contest the minimum environmental flow requirement in future after seven years from the commissioning of the Kishenganga power plant.

Thus CoA has provided an option to rectify omissions of India in the future so that the Kishenganga power project becomes economically viable as the stipulated minimum environmental flows are nearly 25% of the total inflows.

In 2013 local population of Bandipora protested against Hindustan Construction Company (HCC) executing the 330 MW Kishenganga hydroelectric project in the area.