India’s plan to create over $1bn sovereign-backed fund to boost trade and investment for domestic power utilities in South Asia will largely benefit Bhutan to fund its power distribution projects to its remote areas. Riding high on generating 45 percent of Bhutan’s revenues from exports of hydro energy to India, the country has earmarked $5mn for renewables from wind, solar and biogas, especially for families who live in remote areas.
Albeit the renewable power generation is relatively new to the mountainous south Asian country, it is upbeat about the commencement of the project by early next year. Mewang Gyeltshen, chief engineer from the Ministry of Economic Affairs of Bhutan told Recharge that energy demand was increasing by 12 percent, and country had sufficient supplies but remote households needed a sustainable standalone off-grid system.
On the other hand, India’s energy fund is aimed at developing a South Asian regional power grid, with focus on renewable sectors such as hydro, solar and wind. It will comprise of Bhutan with investment of about $850mn (3,000 MW), a 400-kv transmission line at $50mn with Nepal, a 1,000 MW HVDC link with Sri Lanka costing $415mn and a 1,000-MW HVDC back-to-back link with Bangladesh at $220mn.
It should be recalled the Tala Hydro power project in Bhutan, a joint venture by Indian firms, has been successfully commissioned in September 2006 and transmits power to North India. The project has mutually helped, Bhutan to jack up its economy while India to reduce power shortages in its northern parts.
The success of Tala has prompted other Indian energy firms to foray into Bhutan. Last month, the THDC India Ltd, a Govt. of India undertaking, has signed a MoU with Bhutan for the Detailed Project Report (DPR) of 180 MW Bunakha hydroelectric project in Bhutan. The Bunakha project is a part of the Indian government’s initiative to develop 10,000 MW of hydro power in Bhutan by the year 2020.
Bhutan sells hydropower to India at a price of $0.04 per kW, making 100 percent profit from a production cost of $0.02 per KW. Since it is estimated that for every one percent GDP growth more than the same percentage of energy production is required, Indo-Bhutan energy co-operation is likely to be a long-term one.
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