Caution required to take up new hydropower projects

The monetary benefit raked in by Chukha hydropower project, which was started in the 5th Five-Year-Plan (FYP), helped boost Bhutan’s economy, and thus, hydropower export is seen as the major growth driver.

However, Prime Minister, Dr Lotay Tshering, while presenting the State of the Nation Report in the Parliament, said the government has not denied the risks associated with hydropower projects, and henceforth, certain cautious approaches will be adopted in undertaking the new hydropower projects.

PM said that many people assume that hydropower loan does not pose any risk, but he cautioned, “A loan is a loan and it’s no different from other type of loans.”

In FY 2018-19, the hydropower sector, including both generation and construction, is expected to contribute about 28.3 percent of GDP and remain within the range of 20 percent in the medium term, thereby continuing to help massively in the country’s economic growth.

The five hydropower plants under the Druk Green Power Corporation (DGPC) generated 6,573.990 million units (MUs) of electricity in 2018, of which 4,053.588 MUs was exported. The gross revenue earning from the sale was Nu 11.681 billion (bn).

The government also adopted the Hydropower Development Strategy Report in March 2019 considering issues concerning accelerated mode of implementation of 10,000 Megawatts (MW) initiatives such as time and cost overruns and macro-economic imbalances.

The Electricity Act 2001, and Sustainable Hydropower Development Policy 2008 are also being reviewed whereupon the investment in hydropower is being pursued in a staggered manner to achieve the economic goal of self-reliance through sustained economic growth, said the PM.

The government has initiated energy banking to meet the increasing domestic demand. The formulation of Power System Master Plan 2040 is under progress and will be completed by November 2019.

The domestic tariff cycle for 2019-22 is being reviewed, and to be scheduled for finalization by June 2019, after which the requirements for subsidy allocation will be reviewed. Furthermore, the preparation of dam safety guidelines and development of national standard bidding documents for hydropower projects have been initiated and are expected to complete by 2019.Bhutan Hydropower Services limited (BHSL), manufactured two Francis turbines for BAJOLI HOLI and ALPASLAN, Turkey.

Apart from general initiatives taken by the government and many other approaches under way, the government has also specifically initiated development plans hydropower- 10,000MW and outside 10,000MW.

Mangdechhu Hydroelectric Project

The government formalized the export tariff of Nu 4.12 per unit with tariff schedule for 35 years, through signing of the tariff protocol in April 2019. The project is expected to generate 3,008 MUs of electricity annually and contribute net revenue of Nu 5.6 bn annually (approximately).

Punatsangchu-I and II Hydroelectric Project

The government is committed to expedite the work and ensure that the projects are commissioned in 2024-25 and 2022-2023, respectively.

Kholongchhu Hydroelectric Project

The pre-construction works of 600 MW Kholongchhu Joint Venture (JV) Project that was started in September 2015, is completed and the preparation of the signing of the Concession Agreement is underway.

As for initiatives for development of Hydropower outside 10,000MW;

Dagachhu Hydroelectric Project

The 126 MW Dagachhu project generated 366.04 MU of energy in 2018 earning a gross revenue of Nu 1.084 bn.

Tangsibji Hydro Energy Limited

The main construction works of 118MW Nikachhu HEP is progressing smoothly with physical progress of 31.3 percent as of May 2019. The project is to be commissioned in December 2021.

Apart from such initiatives, the government has also approved the revision of Sustainable Hydropower Development Policy 2008, intended to ensure that benefits accrue to all Bhutanese people and inter-generational equity through broad based ownership strategy.

There have been 92,043 rural households, including a total of 229 households under Soe and Lingzhi gewogs, electrified, thereby achieving 99.9perecnt electrification as of May 2019. A total of 88 biogas plants were also installed under six dzongkhags, and such a move is expected to minimize the dependence on imported cooking gas.

Hydropower will continue to be one of the priority sectors and the current government aspires to see the construction of Sankosh Reservoir Plant take off during their term in office.


The government will institute measures to promote new business startups and strengthen existing ones through targeted interventions to create more jobs and diversify the economy.

The government has also approved a flagship program on Startup and CSI with an outlay of Nu 1.2 bn, whereupon the program will target export of 20 CSI products, support 1,050 business entities, both new and existing,  create additional jobs, and establish a business startup center as well as revise the Foreign Direct Investment Policy and CSI policy to enable investment and private sector growth.

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