The Baglihar Power Project, also known as Baglihar Hydroelectric Power Project, was constructed within the parameters of the Indus Water Treaty, making option 1 correct. The treaty between India and Pakistan provides guidelines for the usage of three rivers of the Indus system, one of them being Chenab, on which the project is built. On the contrary, statement 2 is incorrect. The Baglihar Power Project was not completely built by the Union Government. Instead, it was developed by the Jammu and Kashmir State Power Development Corporation. Also, it was not funded by loans from Japan and the World Bank. It was financed through a variety of bonds. Therefore, option 1 is the correct answer, as only the first statement is accurate.