Narendra Modi's visit to Bhutan to see fast-tracking of 12 hydroelectric projects

Jun 16 2014, 09:12 IST
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Prime Minister Narendra Modi shakes hands with Bhutan's King Jigme Khesar Namgyel Wangchuck during their meeting at Thimphu. (Reuters) Prime Minister Narendra Modi shakes hands with Bhutan's King Jigme Khesar Namgyel Wangchuck during their meeting at Thimphu. (Reuters)
SummaryPM Narendra Modi is on two-day trip to display 'special' status for Bhutan in India's foreign policy.

At a time when progress on new hydropower projects slated for joint development by India and Bhutan seems to have lost the impetus, the Indian delegation currently in Thimphu is likely to commit to an implementation schedule for 12 hydro projects that were to be originally set up by the year 2020.

All of these projects, six of which have their detailed project reports ready, are well behind schedule. 

The visit by Prime Minister Narendra Modi comes at a time when the year 2020 target of developing 10,000MW of hydroelectric capacity in Bhutan with Indian assistance is clearly set to be missed, given the lackadaisical progress on the projects that were selected for implementation by Government of India and the Royal Government of Bhutan under a framework agreement. 

Lack of progress is a concern, particularly from the Bhutan point of view, considering that the four operational projects add up to just 1,480MW, just about 6 per cent of the country’s total potential.

But even at this low level, hydropower is Bhutan’s biggest export and accounts for one-fifth of its GDP. Apart from these 12, four projects are currently under construction. The four projects that are already in operation in Bhutan were all developed jointly, and the bulk of the power is being evacuated by India.

Among the projects hanging fire, work has not started on three bilateral projects — Sunkosh Reservoir, Kuri-Gongri and Amochhu Reservoir.

Besides, work on four proposed joint venture projects between Druk Green Power Co (DGPC), Bhutan and Indian government companies — Kholongchhu, Chamkharchhu–I, Wangchhu and Bunakha hydroelectric projects — has also not started and the MoUs are waiting to be signed. 

The one positive takeaway is the Dagachhu hydroelectric project, a joint venture between DGPC and Tata Power, that is nearing completion. In this project, Tata Power has invested  26 per cent equity while DGPC and the Bhutan Pension Fund have jointly invested 76 per cent equity. 

Out of the four hydro projects that are operational, three — Chukha (336MW), Tala (1,020MW) and Kurichhu hydroelectric projects (60MW) — were developed bilaterally by the governments of Bhutan and India, primarily for export of power to India.

The Indian government provided the entire finance in the form of 40 per cent grant and 60 per cent soft loan. India also rendered technical assistance in implementation of the projects. 

The peak load of Bhutan is about 400 MW and may increase to 2,000MW by 2030. The tariff of the bilateral projects is mutually negotiated, with a monthly billing period and the currency of payment being Indian rupees.

India-Bhutan-power

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