Debt, project delays worry Bhutan: 

Debt, project delays worry Bhutan:

Context:

Recently, the Doklam stand-off brought a spotlight on India-Bhutan ties however there is need for greater focus on other issues like hydropower project construction.

What is the role of Hydropower in Bhutan’s economy?

• Hydropower projects are critical for the Bhutanese economy.
• They have been at the core of Bhutan’s plans for self-reliance since the first five-year plans in 1961

What are the emerging challenges?

• At present Bhutan is facing growing debt burden due to delays in 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
• This accounts for 77% of the country’s total debt, and is 87% of its GDP.
• A major reason for delays in hydropower projects is attributed to the fact that India is at present a power-surplus country and the demand growth was slower than expected.

What proposals has the Bhutanese Hydropower Committee put forward for India?

• 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;
• To undertake only those that come with Inter-governmental guarantees rather than joint ventures between Indian and Bhutanese entities.

What is India’s response?

• The Government has looked at the proposals of the Bhutanese hydropower committee however; it has also accepted that it would be difficult to meet many of them, as India’s own power sector needs to compete.