It lies west of Callaqui volcano at the confluence of the rivers Pangue and Huiri-Huiri.

Behind the dam lies a reservoir of 500 hectares (1,200 acres), 14 kilometres (8.7 mi) long and 360 metres (1,180 ft) wide.

This makes it one of the most efficient large hydropower plants in the world, as measured by the relation between electricity production and area flooded.

[citation needed] The construction of Pangue, just as the one of Ralco, generated controversies between environmentalists, the Government and the private power company Endesa, because the dam impacted the indigenous Pehuenche people, whitewater rafting areas and the rights of farmers further downstream.

During the construction of the dam, the Appellate Court of Concepcion halted construction arguing that the filling of the reservoir and the dam’s operation unduly affected the water rights of farmers further downstream.