Feasibility studies The unique idea of harnessing the westward flowing water of the Periyar river and diverting it to the eastward flowing Vaigai river was first explored in 1789 by
Pradani Muthirulappa Pillai, a minister of the Ramnad king Muthuramalinga Sethupathy, who gave it up as he found it to be expensive. The proposal was resubmitted a number of times and in 1862, Captain J. G. Ryves, M.E., carried out a study and submitted proposals in 1867 for another earthwork dam, 62 feet high. The matter was debated by the Madras Government and the matter further delayed by the terrible famine of 1876–77. Finally, in 1882, the construction of the dam was approved and Major
John Pennycuick, M.E., placed in charge to prepare a revised project and estimate which was approved in 1884 by his superiors. After several failed attempts to renew the agreement in 1958, 1960, and 1969, the agreement was renewed in 1970 when
C Achutha Menon was Kerala Chief Minister. According to the renewed agreement, the tax per acre was increased to 30, and for the electricity generated in Lower Camp using Mullaperiyar water, the charge was 12 per
kilowatt-hour. Tamil Nadu uses the water and the land, and the Tamil Nadu government has been paying to the Kerala government for the past 50 years 2.5
lakhs as tax per year for the whole land and 7.5 lakhs per year as surcharge for the total amount of electricity generated. The validity of this agreement is under dispute between the States of Kerala and Tamil Nadu. As of 2013 the matter is pending before a Division Bench of the Supreme Court. The dispute puts into question the power of the federal government of India to make valid orders respecting Indian States, in this case regarding a watershed and dam within one state that is used exclusively in another.
Construction In May 1887, construction of the dam began. The dam created a reservoir in a remote gorge of the Periyar river situated 3,000 feet above the sea in dense and malarial jungle, and from the northerly arm of this manmade waterbody, the water flowed first through a deep cutting for about a mile and then through a tunnel, 5704 feet in length and later through another cutting on the other side of the
watershed and into a natural ravine and so onto the Vaigai River which has been partly built up for a length of 86 miles, finally discharging 2000
cusecs of water for the arid rain shadow regions of present-day
Theni,
Dindigul District,
Madurai District,
Sivaganga District and
Ramanathapuram districts of
Tamil Nadu, then under British rule as part of Madras Province (Sandes, 1935). ==Protected area==