The unique idea of harnessing the westward flowing water of the Periyar river and diverting it to the eastward flowing Vagai 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 location of the dam had first been scouted by Captain J. L. Caldwell, Madras Engineers (abbreviated as M.E.) in 1808 to reconnoitre the feasibility of providing water from the Periyar river to Madurai by a tunnel through the mountains. Caldwell discovered that the excavation needed would be in excess of 100 feet in depth and the project was abandoned with the comment in his report as "decidedly chimerical and unworthy of any further regard".
On 29 October 1886, a lease indenture for 999 years was made between theMaharaja of Travancore, Visakham Thirunal Rama Varma and the Bitish Secretary of State for India for Periyar Irrigation Works. The lease agreement was signed by Dewan of Travancore V Ram Iyengar and State Secretary of Madras State J C Hannington. This lease was made after 24 years negotiation between the Maharaja and the British. The lease indenture granted full right, power and liberty the Secretary of State for India to construct make and carry out on the leased land and to use exclusively when constructed, made and carried out, all such irrigation works and other works ancillary thereto to. The agreement gave 8000 acres of land for the reservoir and another 100 acres to construct the dam. The tax for each acre was 5 per year. The lease provided the British the rights over "all the waters" of the Mullaperiyar and its catchment basin, for an annual rent of 40,000.
In 1947, after Indian Independance, the lease agreement expired. 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 per 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. The matter is currently pending before a Division Bench of the Supreme Court.
In May 1887, construction of the dam began. As per "The Military Engineer in India" Vol II by Sandes (1935), the dam was constructed from lime stone and surkhi (burnt brick powder and a mixture of sugar and calcium oxide, one of the archaic construction techniques of 19th century) at a cost of 104 lakhs, was 173 feet high and 1241 feet in length along the top and enclosed more than 15 thousand million cubic feet of water. Another source states that the dam was constructed of concrete (no real evidence or reference for this) and gives a figure of 152 feet height of the full water level of the reservoir, with impounding capacity of 10.56 thousand million cubic feet along-with a total estimated cost of 84.71 lak.
The construction involved the use of troops from the 1st and 4th battalions of the Madras Pioneers as well as Portuguesecarpenters from Cochin who were employed in the construction of the coffer-dams and other structures. The greatest challenge was the diversion of the river so that lower portions of the great dam could be built. The temporary embankments and coffer-dams used to restrain the river waters were regularly swept away by floods and rains. Due to the coffer dam failures, the British stopped funding the project. Officer Pennycuick raised funds by selling his wife's jewelry to continue the work. In Madurai, Major Pennycuick's statue has been installed at the state PWD office and his photographs are found adorning walls in peoples homes and shops. In 2002, his great grandson was honoured in Madurai, a function that was attended by thousands of people.
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, Madurai District, Sivaganga District and Ramanathapuram districts of Tamil Nadu, then under British rule as part of Madras Province (Sandes, 1935).
The Periyar project, as it was then known, was widely considered well into the 20th Century as "one of the most extraordinary feats of engineering ever performed by man". A large amount of manual labour was involved and worker mortality from malariawas high. It was claimed that had it not been for "the medicinal effects of the native spirit called arrack, the dam might never have been finished". 483 people died of diseases during the construction of this dam and were buried on-site in a cemetery just north of the dam.
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