INDIA-BHUTAN Hydropower Cooperation

  • The hydropower projects are an example of win-win cooperation between India and Bhutan. These projects while generating export revenue for Bhutan are also cementing the economic integration between the two sides.
  • As of now, the estimated target capacity of hydropower projects to be developed jointly by the two countries by 2020 is 10,000 MW.
  • Cooperation in the hydro-power sector, begun in 1988, with the commissioning of the first project, the 336 MW Chukha hydropower plant. It had proved to be the backbone of the Bhutanese economy and had contributed more than 35 percent of Bhutan’s revenues
  • During the period 1998 to 2007, two projects were commissioned. The 1,020 MW Tala Project and 60 MW Kuricchu plant both built by India.
  • In April 2014, the two countries signed an Inter-governmental Agreement on four hydropower projects totaling a capacity of 2120 MW.
  • The four projects to be taken up under the joint venture model were
      • 600 MW Kholongchu,
      • 180 MW Bunakha,
      • 570 MW Wangchhu and
      • 770 MW Chamkharchhu-I.
  • India has so far constructed four Hydroelectric Projects in Bhutan including the 60 MW Kurichhu HEP; 1020 MW Tala HEP; the 336 MW Chukha HEP; and the 720 MW Mangdechhu HEP.
  • Also, three Hydroelectric projects which are under construction include the 1200 MW Punatsangchhu-I, the 1020 MW Punatsangchhu-II and the 600 MW Kholongchhu.
  • Prime Minister Narendra Modi’s maiden visit to Bhutan as the Indian Prime Minister in June 2014 laid the foundation stone for the 600 MW Kholongchu project.
  • Generation capacity by India in Bhutan has crossed 2000 MW.
  • The Mangdechhu Hydroelectric project is a success story of India Bhutan cooperation in the Hydropower sector has recently won the prestigious Brunel Medal-2020.

80% of the Country’s external public debt stems from loans for hydropower projects, mostly financed by India. New Delhi is also the largest buyer of Bhutanese hydropower. The sector makes up 14% of GDP in Bhutan and 27% of the Government’s revenue. The Government now wants to diversify the economy and reduce its reliance on hydroelectricity.

 

Concerns

  • Moreover, despite the doubling of capacity for development by the two countries, the decade following democratic transition saw no new addition in installed hydropower capacity harnessed.
  • The hydro installed capacity in Bhutan with Indian technical and financial assistance up to 31stMarch 2018 was 1416 MW from 3 projects commissioned before change in regime in Bhutan.