Bhutan

Pros­per­ity Through Power

Southasia - - CONTENTS - By Ma­lik Muham­mad Ashraf

Bhutan is a moun­tain­ous coun­try with ex­tremely high al­ti­tudes and ir­reg­u­lar ter­rain, vary­ing in el­e­va­tion by sev­eral thou­sand feet within a short dis­tance. With peren­nial and fast flow­ing rivers and a fair cli­mate, the coun­try has enor­mous po­ten­tial for har­ness­ing hy­dro-elec­tric power. The ex­ploita­tion of this re­new­able source of elec­tric­ity pro­duc­tion at com­par­a­tively cheaper rates has greatly con­trib­uted to the up­lift of the eco­nomic pro­file of Bhutan which set up mega hy­dropower projects in the early 1980s with tech­ni­cal

and fi­nan­cial as­sis­tance from In­dia. Bhutan has a po­ten­tial for pro­duc­tion of 30,000 MW of elec­tric­ity from its rivers, out of which the fea­si­bil­ity for pro­duc­tion of 23670 MW has al­ready been as­cer­tained. Presently, Bhutan is pro­duc­ing 1500 MW elec­tric­ity dur­ing the sum­mer. Nearly 70 per­cent of it is ex­ported to In­dia while the do­mes­tic con­sump­tion is in the vicin­ity of 250 MW.

Re­sources gen­er­ated from the ex­port of hy­dropower to In­dia have been uti­lized to fi­nance schemes and projects re­lat­ing to so­cio-eco­nomic de­vel­op­ment of the coun­try and at­tain­ing in­creased self-re­liance. There is, how­ever, a down­side to this sit­u­a­tion. The low level of wa­ter in the rivers dur­ing dry win­ter re­sults in a steep fall in the power and the coun­try be­comes a mar­ginal net im­porter of en­ergy. To make up for this de­fi­ciency, the Bhutanese gov­ern­ment be­gan ex­plor­ing al­ter­na­tive en­ergy sources such as so­lar, wind and bio-gas.

So­lar en­ergy in Bhutan has re­ceived di­rect in­vest­ments from a num­ber of do­mes­tic and in­ter­na­tional sources. In 2010, the Asian De­vel­op­ment Bank made a grant of over US$ 21 mil­lion for elec­tri­fi­ca­tion of ru­ral homes, aim­ing to pro­vide power both on on­grid and off-grid bases. The Bhutan Power Cor­po­ra­tion pro­vided so­lar elec­tri­fi­ca­tion train­ing to vil­lagers of the ru­ral east­ern ar­eas. So­lar pow­ered light­ing is also avail­able to many no­mads liv­ing within the pro­tected ar­eas of Bhutan. A five year trial pro­gram (2011-2015) is run­ning side by side to pro­duce bio-gas from cow dung. Sim­i­larly in 2010 wind mill pro­grams were im­ple­mented to in­ves­ti­gate the fea­si­bil­ity of us­ing wind en­ergy to al­le­vi­ate hy­dropower short­ages dur­ing dry win­ter sea­son.

Bhutan was one of the poor­est coun­tries of the world prior to 1960, with no in­dus­trial base and paved roads. It was a closed so­ci­ety re­ly­ing mostly on agri­cul­ture with prim­i­tive farm­ing prac­tices. Its ex­ports in­cluded car­damom, gyp­sum, tim­ber, ce­ment, fruit, pre­cious stones and spices be­fore it started pro­duc­ing and ex­port­ing hy­dropower. Bhutan ended its iso­la­tion in 1960 to be­gin its jour­ney to­wards mod­ern­iza­tion through eco­nomic plan­ning pre­pared and sup­ported by In­dia. By 2002, it had a net­work of 3285 kms of roads while it also es­tab­lished rail­way links with In­dia in 2005. How­ever, there is no rail­way net­work within Bhutan.

Bhutan launched its first mega hy­dro­elec­tric project known as the Chuka Hy­dropower Project with a pro­duc­tion ca­pac­ity of 336 MW in 1986 with fi­nan­cial as­sis­tance from In­dia. It was fol­lowed by the Kurichu Hy­dropower Plant (60 MW) in 2001-2002. The Tala Hy­dropower Project, with a 1020 MW ca­pac­ity, was com­mis­sioned in 2007 and proved to be a game changer as it gave a tremen­dous lift to the Bhutanese econ­omy. Another mega project named Pu­natsangchhu with a 1200 MW pro­duc­tion ca­pac­ity was ini­ti­ated in 2008 and is sched­uled to be­come oper­a­tive in 2015. At present, Bhutan has 27 hy­dropower sta­tions, in­clud­ing four ma­jor power plants, 12 mini-hy­dro units and 10 mi­cro plants. Seven projects were ini­ti­ated early this year.

Most of the hy­dropower projects are run-of-the river in­stal­la­tions and are re­garded as cost-ef­fec­tive and en­vi­ron­ment friendly. Hy­dropower now forms the back­bone of Bhutanese econ­omy. Be­sides be­ing af­ford­able and a clean re­new­able source of en­ergy for do­mes­tic con­sump­tion, it is the big­gest source of gov­ern­ment rev­enues. In 2011, 60 per­cent of ru­ral house­holds had elec­tric­ity as com­pared to 20 per­cent in 2003. Nearly 2500 peo­ple use so­lar power. The coun­try does not pos­sess nat­u­ral pe­tro­leum or nat­u­ral gas re­serves but it has 1.3 mil­lion tons of coal re­serves. How­ever, only 1000 tones are mined per year for do­mes­tic con­sump­tion.

In South Asia, Bhutan is the only coun­try with sur­plus power gen­er­at­ing prow­ess and a hy­dropower sec­tor that con­trib­utes to 40 per­cent of gov­ern­ment rev­enue, 45 per­cent of ex­port earn­ings and 25 per­cent of GDP, as per statis­tics com­piled in 2009. In view of the huge po­ten­tial for hy­dropower pro­duc­tion in the coun­try and the con­se­quent ex­ten­sive scope of elec­tri­fi­ca­tion to im­prove liv­ing con­di­tions of the ru­ral pop­u­la­tion, the gov­ern­ment has in­tro­duced far-reach­ing in­sti­tu­tional re­forms to at­tract in­vest­ment for ex­por­to­ri­ented hy­dropower projects and to pro­vide cheap elec­tric­ity to the ru­ral pop­u­la­tion.

The ex­po­nen­tial boost that hy­dropower has given to the GDP can be gauged from the fact that in 1970 the GDP of Bhutan was in the vicin­ity of $0.62 bil­lion which jumped to $1.9 bil­lion in 2012. Sim­i­larly, its per capita GDP in­creased from $212 in 1970 to $2505 in 2012. Bhutan’s econ­omy, though one of the small­est in the world, has grown at a rapid pace. It recorded a growth rate of 8 per­cent in 2005, 14 per­cent in 2006 and 22.4 per­cent in 2007 when the Tala Hy­dro Project was com­mis­sioned. Its per capita in­come was $2420 in 2012.

Bhutan is in the midst of launch­ing three new hy­dropower projects with a view to gen­er­ate an ad­di­tional 10,000 MW elec­tric­ity to be ex­ported to In­dia. As Bhutan does not have enough in­ter­nal hu­man re­sources, in­fra­struc­ture and fi­nan­cial strength to pro­pel their con­struc­tion on its own, the gov­ern­ment is con­tem­plat­ing to work on a two-pronged strat­egy. The projects would be ei­ther built on the ba­sis of in­ter-gov­ern­men­tal loans or as joint ven­tures.

Ac­cord­ing to this plan, the gov­ern­ment of In­dia will in­stall power plants of ca­pac­ity be­tween 7000 to 8000 MW while the rest 2000 to 3000 MW would be gen­er­ated through joint ven­tures be­tween the In­dian Pub­lic Sec­tor and the DGPC as part­ners. The In­dian part­ners would pro­vide eq­uity of 70 per­cent and the DGPC would con­trib­ute 30 per­cent, which again would be pro­vided by In­dia as a grant to the gov­ern­ment of Bhutan.

No doubt the com­ple­tion of the power pro­duc­tion fa­cil­i­ties, en­vis­aged to pro­duce an ad­di­tional 10,000 MW of elec­tric­ity within the next six years, will be an ar­du­ous un­der­tak­ing but their com­ple­tion on time would give an ex­po­nen­tial boost to the econ­omy of Bhutan. The plan ac­tu­ally en­vis­ages a nearly seven times in­crease in the power pro­duc­tion of the coun­try by 2020. Once it is achieved, it is likely to raise the ex­port earn­ings by the same mar­gin with all the ac­com­pa­ny­ing trickle-down ef­fects on the over­all eco­nomic pro­file of the coun­try and the eco­nomic sit­u­a­tion of its cit­i­zens. In­dia, which needs elec­tric­ity to pro­pel the wheels of its in­dus­try, would also be bet­ter off after this de­vel­op­ment. In fact, this is go­ing to be a win-win sit­u­a­tion for both coun­tries.

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