Exclusive: Bangladesh, Bhutan and India agree to 1125 MW Dorjilung project

In a first, Bangladesh will be the first country apart from India to invest in a major hydropower mega project in Bhutan, in the form of the 1125 MW Dorjilung project.

This comes after India recently and informally agreed to the investment from Bangladesh in Bhutan.

India’s assent is important as any power export infrastructure to Bangladesh from Bhutan, like power transmission lines and towers, has to be built over Indian soil before reaching Bangladesh.

Bhutan and Bangladesh had already signed a MoU on hydropower cooperation and the signature of the third partner, which is India, was awaited in this trilateral cooperation project.

Prime Minister Lyonchhen Tshering Tobgay said, “Bangladesh, India and Bhutan have agreed to all work together to start the project. It is a very exciting and first mega project of its kind. While continuing the tradition of constructing our mega projects with India we have been successful in involving a third country in the form of Bangladesh to which power will be sold from the project.”

The Prime Minister said, “This is good for regional cooperation as all three countries benefit.”

According to a source India also wants to participate in the project and invest in it since the project will be an Inter-Governmental one. New Delhi is expected to ask for a small stake in the project though the exact nature and scope is yet to be decided and will have to be discussed.

With the informal assent from India the next stage will be for the three countries to sit down and negotiate details of the implementation of 1125 MW Dorjilung project. The Bhutan government will be fast tracking the process so that a formal agreement can be signed between the three countries on the project.

While Bangladesh will get to invest in and import power from Bhutan over Indian soil the main beneficiary of the project is expected to be Bhutan.

Apart from the economic impact of this mega project the project also has a major geo-political impact as it is the first time that a third country is investing in Bhutan’s mega hydropower project sector. Importantly, the project is expected to further strengthen the friendly relationship between the three countries and be South Asia’s first trilateral cooperation on an energy project.

It has been learnt that during the visit of a Government of India (GoI) delegation from 7th to 11th April 2016 lead by the Indian Power Secretary P.K Pujari, Bhutan raised the issue of the 1125 MW Dorjilung project.

The Prime Minister Lyonchhen Tshering Tobgay raised the issue of Bangladesh’s investment in the Dorjilung project with the delegation that also consisted of the Joint Secretary North and Joint Secretary Hydro.

Similarly the Ministry of Economic Affairs (MoEA) through its Secretary Dasho Yeshi Wangdi also raised the issue in the delegation level talks between the two sides.

At the time the Indian Power Secretary is said to have expressed that the GoI is very supportive of the proposal and that the proposal is under active consideration.

Subsequently the Bhutanese government again followed up with the India on the issue leading to a so far informal understanding which is expected to materialize in a formal agreement between the three countries.

The lack of adequate electricity is one of the biggest development constraints for Bangladesh which cannot meet its power demand and suffers from regular load shedding. In 2013 only an estimated 60 percent of Bangladesh’s population was connected to the electricity grid. 2014 saw massive energy blackouts across Bangladesh. Generation is often far short of the installed capacity. In 2013 Bangladesh had 10,213 MW of installed capacity but the maximum generation achieved was 6,675 MW.

Today Bangladesh has around 12,780 MW of installed capacity but generation is always well below the capacity. Moreover, Bangladesh electricity demand is expected to go up to 39,000 MW by 2030.

In an earlier interview the Bangladesh Ambassador to Bhutan, Jishnu Roy Choudhury stressed that his country needs the power as it is a primary ingredient of development and would help with everything from industries to ICT connectivity in his country.

He said there is good friendship between the political leaders of the three countries and also political willingness for such a project. The Bangladesh Ambassador also pointed out that that it is also the philosophy of the Indian Prime Minister Narendra Modi to enhance ties and cooperation at the sub regional level.

The project apart from benefitting the country will also provide additional development incentives in Eastern Bhutan as it would be located on the Kurichhu river.

The whole idea was first discussed between the three countries as a SAARC sub-grouping on the issues of water and energy based on the SAARC Energy Cooperation Framework signed by all the SAARC countries in the 18th SAARC summit in November 2014.

The initial proposal came from such a sub-regional grouping to enhance better power connectivity.

The reason for offering Dorjilung specifically to Bangladesh is that firstly it is outside the 10,000 MW agreement between the Bhutan and India and secondly its Detailed Project Report, prepared by the Druk Green Power Corporation, is ready.

The former MoEA Minister Lyonpo Norbu Wangchuk at the time had said Bangladesh has always expressed willingness to import or invest in hydropower in Bhutan while India has always shown willingness in bringing about regional integration in energy.

The Minister had even taken the former Indian ambassador and the current Bangladesh ambassador to see the Dorjilung site last year.

That first step is in signing a generic MoU between the three countries. Bhutan had drafted a MoU on trilateral energy cooperation and sent it to Bangladesh and India around January 2016. Bangladesh gave its assent and signed around February 2016 while India which was also supportive took some time to study the MoU.

Once the MoU is agreed to by all three countries they will then form a joint tripartite task force which will look in detail at the cooperation between the three countries.

The Bangladeshi interest to invest in Bhutan’s hydropower sector is not a new one. It has been there from 2009-10 onwards where Bangladesh expressed open interest to invest in Bhutan.

While Bhutan has taken the lead in promoting the Dorjilung project it has been learnt that even Bangladesh has been lobbying with India to agree to the project. India on its part apart has taken into account political considerations as currently both the governments are seen as having good relations with India.

 

Photo: Hydro Diplomacy – Bangladesh Ambassador (left), DGPC MD (center) and former Indian Ambassador (right) during a site visit to Dorjilung site in December 2015

Correction: An earlier version of this article mentioned 1024 MW which the paper got from a senior MoEA official. The correct figure is 1125 MW as per the latest DPR report from DGPC.