He said the exploitation of the rich resource of hydropower that Bhutan possesses will help in sustainable development and fight global warming.
"Bhutan is a rich source of clean energy. In the recent years, India has taken some initiatives to tap it. We want to take it forward," Modi said while addressing the joint session of Bhutanese Parliament here.
"It is not limited to exploiting the resources or meet India's demands, but it is necessary of sustainable development and address the issue of global warming," he said and noted that both India and Bhutan are determined to collectively fight the global warming.
Soon after he laid the foundation stone electronically for the 600 MW Kholongchhu Hydroelectric Project from the courtyard of Bhutan's Parliament complex.
"Construction on 600 MW Kholongchhu Hydroelectric Project officially begins with laying of foundation stone," Bhutan's Prime Minister Tshering Tobgay tweeted.
The project is one of the several being undertaken jointly by India and Bhutan.
External Affairs Minister Sushma Swaraj, while talking to reporters later, said the hydropower projects which have been pending will be pushed as she noted that Modi believes in quick implementation of schemes and programmes.
Three Hydro-electric projects (HEPs) totalling 1416 MW (Chukha, Tala and Kurichu) are already operational.
Three more HEPs [Punatsangchu I (1200 MW), Punatsangchu II (1020 MW) and Mangdechu (720 MW)] are under construction. They are scheduled to be commissioned in 2017-18.
In April, 2014, the two countries had signed a framework agreement on four more JV-model HEPs totalling 2120MW. Of these, pre-construction activities for the 600MW Kholongchu HEP as a JV-model HEP between Satluj Jal Vidyut Nigam (SJVN) and Druk Green Power Corporation (DGPC) will commence soon.
"Our hydropower cooperation with Bhutan is a classic example of win-win cooperation," an Indian official said, adding that "the hydropower projects generate export revenues for Bhutan, cement our economic partnership and provide clean and low-cost electricity to India."
Modi arrived here yesterday on his first foreign trip after assuming office last month. The 600 MW Kholongchu hydel project, to be developed by SJVN along with Druk Green Power Corp, is estimated to cost more than Rs 3,868 crore.
In a statement, SJVN said major works for implementing the project are likely to commence soon.
"The project is estimated to cost Rs 3,868.87 crore which will be shared in the ratio of 50:50 by the two joint venture partners," SJVN Chairman and Managing Director R P Singh said.
A 'run of the river project' on the Kholongchu river in Bhutan, it would be implemented by an equal joint venture between SJVN and Druk Green Power Corp.
"... the project shall be financed under a debt equity ratio of 70:30," the statement said.
Among others, SJVN is operating India's largest 1,500 MW Nathpa Jhakri hydel plant in Himachal Pradesh.