Hydropower debt, delays biggest challenge in ties with India, say Bhutan officials

Prime Minister Narendra Modi meets Prime Minister of Bhutan, Tshering Tobgay. A file photo.

Prime Minister Narendra Modi meets Prime Minister of Bhutan, Tshering Tobgay. A file photo.   | Photo Credit: PTI

“Hydropower projects are critical for the Bhutanese economy, and are at the core of Bhutan’s plans for self-reliance.”

While the Doklam stand-off brought a spotlight on India-Bhutan ties, other issues like hydropower project construction needed greater focus, said senior Bhutanese experts and officials, flagging concerns during a two-day conference here that ended on Wednesday.

“Hydropower projects are critical for the Bhutanese economy, and are at the core of Bhutan’s plans for self-reliance ever since the first five-year plans in 1961,” explained Dasho Karma Ura, President of the Centre for Bhutan Studies and Gross National Happinness (GNH) Research, told The Hindu at the India-Bhutan Dialogue that was attended by delegates from Bhutan and India. “It is necessary that the issues that have come up due to debt and delay are addressed at the earliest,” he added.

In particular, officials involved in the “Hydropower Committee” set up by the Bhutanese government in May this year spoke about the emerging challenges from the growing debt burden Bhutan carries due to delays in the major hydropower projects.

As of July 2017, Bhutan’s debt to India for the three major ongoing projects: Mangdechhu, Punatsangchhu 1 and 2 is approximately ₹12,300 crores which accounts for 77% of the country’s total debt, and is 87% of its GDP. While the cost of the 720 MW Mangdechhu project has nearly doubled in the past two years of construction, both Punatsangchhu 1 and 2, each of 1200 MW have trebled in cost and been delayed more than five years over the original completion schedule.

“What concerns us is that the partnership seems to be going backwards. A decade ago we shifted from doing one project at a time to doing many projects together, in order to reach the goal of 10,000MW in hydropower by 2020. Maybe we just weren’t ready and should rethink it,” a senior official from the Hydropower committee said.

Another issue, the officials added, was the fact that India is now a power-surplus country and the demand growth was slower than expected. The government’s push for other renewable energies like Wind and Solar power was also seen as an issue. Meanwhile, the interest repayment on projects that are being financed by India as 30% grant and 70% loan at 10% annual interest is piling up.

MEA sources told The Hindu that the government is looking at the proposals of the Bhutanese hydropower committee, but accepted that it would be difficult to meet many of them, given India’s own power sector needs to compete. Among the proposals sent from Thimphu were — to only undertake any new projects after the current projects being undertaken by NHPC are commissioned; to move from “run of the river” projects currently favoured to only a few major “reservoir” projects; and to undertake only those that come with Inter-governmental guarantees rather than joint ventures between Indian and Bhutanese entities.

“While the [Doklam situation] showed that government to government relations can be strengthened very quickly, it is important that hydropower, which is a key issue for the Bhutanese people also be looked at more quickly,” Mr. Ura said, adding that public opinion in Bhutan was beginning to question the viability of the debt incurred by the projects.

The India-Bhutan Dialogue also looked at environmental issues, illegal wildlife trade and cross-border drug smuggling and other areas of concern between the two countries which will mark 50 years in their official relationship in 2018.

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Printable version | Mar 31, 2020 8:09:43 AM |

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