The Bhutanese Leading the way.
Tariff to be Nu 5.10 per unit
In a major development, Bhutan can finally start exporting the power from the 1020 MW Punatsangchu II project to India from 20th September 2025 onwards.
While the tariff rate is not yet decided, the payment that will be made will be based on the finalized tariff rate.
The tariff rate itself is expected to be Nu 5.10 which will be finalized by the end of September after which a formal power purchase agreement will be signed too.
The levelized tariff, which is the average tariff over 35 years, is expected to be Nu 5.6.
The approval to export power came from India on 18th September, and while Bhutan was ready to export the power on 19th September, the issue was that the power consumers in India, which are Indian states, had already booked their power for 19th September from the day ahead market in India.
Due to good Zakar falling on 19th September, Bhutan has, as a tendrel, exported 22 MW from 12 noon to 1 pm.
Bhutan can export only around 745 MW as two of the six units are down. It has been learnt that unit three and unit five have been down for a week or more due to some vibration and setting issues and efforts are on to fix them with BHEL engineers also at site to fix their equipment.
With each unit at 170 MW the four units should generate 680 MW, but there is an additional 10% generation since the river is at full flow and this means the total generation is 745 MW.
The granting of approval to export P II power to India is the most delayed till date for any project and also unusual. In the past, as soon as projects like Mangdechu, Tala, etc., were commissioned they were allowed to export power to India.
P II commissioning was carried out in phases. Units 1 and 2 came online in December 2024, followed by Unit 3 in March 2025 and Unit 4 in May. Unit 5 began generating electricity on 17th July 2025 and the final Unit 6 joining the grid on 27th August 2025.
The delayed approval to export power to India and the delay in the tariff finalization rate has meant that the P II project could have earned more than what it has, especially since May 2025 when generation picked up with the river levels.
The expected annual revenue from P II at full generation is expected to be around Nu 20 billion (bn) a year, of which the loan repayment is Nu 8 bn and Operation and Maintenance (O&M) costs is expected to be Nu 2 bn a year.
For this year, given that there was less generation since units had to come online one by one, the revenue expected is Nu 12 bn or less and the O&M costs is expected to be Nu 800 million (mn).
The loan component will kick in after the first two years of commissioning.
The project took 14 years and Nu 88.5 bn to complete.
The project is expected to generate 4,357 million units of electricity annually
During the lean winter months, when river flows fall, the project will still provide 199 MW of firm power, an important addition to Bhutan’s energy security.
Currently almost all existing projects are generating at 10% above capacity due to the monsoon rains.
1020 MW Tala is generating 1,125 MW, 336 MW Chukha is generating 369 MW, 720 MW Mangdechu is generating 784 MW, 118 MW Nikachu is generating 129 MW, 126 Dagachu is generating 126 MW, 60 MW Kurichu is generating 66 MW, 64 MW Basochu is generating 64 MW and 18 MW Sochu is generating 10 MW.
The total generation minus P II is 2,673 MW of which 1,450 MW is being exported and around 1,100 to 1,200 MW is being consumed within the country.
Once the 745 MW of P II’s four units are exported from 20th September then Bhutan will be exporting around 2,200 MW. It will reach 2,570 MW once the other two units of P II are also repaired and back up.
Dagachu and Bashochu’s project design do not allow them to generate 10% extra while Sochu can only fully generate 18 MW once the 66 KV line is fully installed to carry that power.
