The line was originally built as a construction railway to support the building of hydroelectric dams in the Oberhasli and the Grimsel Pass. It was built by the Kraftwerke Oberhasli (KWO) company, which was founded to build and operate the hydroelectric plants, and it was opened in 1926. Several Mallet-type steam locomotives were acquired from the Rhätische Bahn to operate the line. As well as construction traffic, the line also operated a limited passenger service for workers and their families. In 1931 a battery railcar was purchased, and a second in 1939.