NEW DELHI: India’s Prime Minister Narendra Modi, together with Bhutan’s King Jigme Khesar Namgyel Wangchuck, inaugurated on Tuesday the Punatsangchhu II Hydroelectric Project, a giant Indian-funded hydropower plant.
The project, situated along the Punatsangchhu River, has a generation capacity of 1,020 MW and is currently the largest fully operational hydropower plant in the Himalayan kingdom, where electricity is the primary export commodity and a major source of revenue.
Bhutan is one of the few countries where nearly all electricity generation comes from renewable sources — 99 percent of which is hydropower. Almost all of it is exported to India.
“Taking this progress forward, another major step is being taken today. A new hydroelectric project of over 1,000 MW is being launched, which will increase Bhutan’s hydropower capacity by nearly 40 percent,” Modi said during a reception with the Bhutanese king and Prime Minister Tshering Tobgay.
With an area of 34,400 sq. km and a population of less than 800,000, Bhutan is landlocked between India to the south, east and west, and China to the north.
India is its largest investor and trading partner, with bilateral duty-free transit for goods accounting for nearly 80 percent of its trade.
“And our partnership isn’t limited to hydroelectricity. We are now taking major steps together in solar energy. Important agreements related to this have also been made today,” Modi said.
“The progress and prosperity of India and Bhutan are closely linked. In this spirit, last year the government of India announced a contribution of 10,000 crore rupees ($1.2 billion) to support Bhutan’s Five-Year Plan. These funds are being utilized across all sectors.”
The financing of the Punatsangchhu II Hydroelectric Project is structured as a 30 percent grant and 70 loan arrangement from the Indian government.
The construction of a bigger one, also Indian-funded — the 1,200 MW Punatsangchhu-I Hydroelectric Project — is still underway.
In September, India announced another infrastructure mega-project in Bhutan; a cross-border railway slated to connect the mountainous neighbor with its nearly 70,000-km railway network in four years.
The $454 million project will link the eastern Indian states of Assam and West Bengal to two towns in Bhutan. Together, the lines will cover a total distance of 89 km.
