The project helps produce 4,000 gigawatt-hours (14,000 TJ) of electricity per year and transfer water from the Cajamarca region west to Lambayeque, near Olmos for the reclamation and irrigation of 43,500 hectares (107,000 acres) of farmland.

Preliminary feasibility studies were conducted in the 1960s by Italconsult, in 1979-1982 soviet engineers from Hydroproject prepared and approved new design[5][6] Tunnel excavation had been occurring since the 1950s and through the 1970s but work was halted in the 1980s due to a lack of funding.

[11] The contract for the hydroelectric component, which is planned to consist of two power stations, was awarded to Sindicato Energético S.A. in June 2010.

Water diverted by the dam is transferred via the tunnel to the Olmos River where it will be used to irrigate 5,500 hectares (14,000 acres) of land.

At the base of the valley, water will settle in the Palo Verde Reservoir which will have a storage capacity of 790 million cubic metres (28×10^9 cu ft).