The Bhutanese Leading the way.
The country’s economy, deeply intertwined with its expansive hydropower sector, is showing promising signs of resilience and growth according to the latest World Bank report.
With an average real GDP growth rate of 7 percent from 1980 to 2020, Bhutan’s economic trajectory has been significantly shaped by the operationalization of major hydropower projects.
But while hydropower has been a major boon, it has also brought its own set of challenges.
The influx of foreign currency from energy exports has led to worries about the so-called “Dutch Disease,” where the strong Ngultrum might make other sectors less competitive. And while the hydropower sector is thriving, it has not translated into widespread job creation.
Despite its significant economic contributions, the sector employs less than 1 percent of country’s workforce, leading to high unemployment, particularly among young and educated Bhutanese.
The World Bank report highlights the pressing need for Bhutan to diversify its economy. It’s clear that while hydropower is a cornerstone of growth, relying solely on it is not a sustainable long-term strategy.
The report suggests that Bhutan could benefit greatly from using its hydropower revenues to boost other sectors and create more job opportunities.
In response to these challenges, the country is exploring ways to leverage its hydropower success for broader economic benefits. There’s a push to foster private sector development and to find new avenues for growth that can provide meaningful employment and bolster economic stability.
Since country’s first major hydropower project, Chhukha, came online in 1987, the country has dramatically expanded its hydropower capacity. From an initial 336 MW, Bhutan’s capacity has surged to an impressive 2,326 MW, thanks to landmark projects like Tala and Mangdechhu.
Moreover, ongoing projects like Puna I and II, along with the anticipated 1125 MW Dorjilung project, are set to more than double the current capacity, underscoring the country’s commitment to harnessing its hydropower potential.
The hydropower sector is crucial for our country, contributing over one-third of its goods exports and domestic revenues, and constituting 26 percent of its GDP.
This sector’s success has been bolstered by a mix of loans and grants, notably from India, with Bhutan exporting surplus electricity to its neighbor.
Our country’s hydropower achievements are a testament to the country’s innovative spirit and determination. However, as the nation continues to harness the power of its rivers, it faces the challenge of balancing this growth with efforts to ensure that all Bhutanese benefit from the country’s progress.
