The project was initially planned in 1968 by the local authorities, before the Government of Japan funded a study between 1985 and 1987 to further examine the hydroelectric potential in the upper reaches of Kotmale River.

Further funding was then provided by Japan for the engineering study, which included a review of the feasibility study, selection of an optimal development plan, development of the detailed design, and the preparation of tender documents and an environmental impact assessment report.

The entire project covers an area of approximately 540 km2 (208 sq mi), and is developed in five phases: A total of 2,250 construction workers are employed at the site, of which 2,100 are locals, and 150 are foreign.

Excavation on the tunnel was completed and ceremonially opened by President Mahinda Rajapaksa on 4 November 2010.

Water arrives at the powerhouse from the dam via the 12.89 km (8.0 mi) long Upper Kotmale Tunnel, which then feeds the 793 m (2,602 ft) penstock.

The relocated families are provided with concessionary loans to start new self-employment ventures, while additional facilities such as the Talawakele Central College, places of worship, a cinema hall, a library, and a community centre, are being established.

As ordered by the Government Extraordinary, the St. Clair's waterfall will maintain a continuous flow of 47,250 m3 (1,668,618 cu ft) of water for 10 hours and 30 minutes daily, between sunrise and sunset.