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By
R.N.Bhaskar
July 2007 (published in the
DNA).
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The
Indo-Bhutan relationship dates back
to 1958 when Nehru and his daughter traveled all the way to this
Himalayan country; much of it on yak-back.
India is
Bhutan’s biggest trade
partner. In 2005, for instance, imports from India stood at Rs.1,280
crore, accounting for 75% of Bhutan’s imports. Likewise exports
from Bhutan to India during the same year stood at Rs.997 crore
(87.5% of total exports).
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Bhutan’s biggest revenue earner is
hydel power. It brings Bhutan lots of money, and it brings India a
source of cheap reliable power – much cheaper than those from
India’s own new power plants.
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Tucked away, on the fringes of the
Himalayas on one side, and the Tibetan desert on the other, is the
exquisite land of Bhutan. Most locals still fondly recall how, in
1958, Jawaharlal Nehru and his young daughter decided to travel to
this land – much of the journey on the backs of yaks. That trip, as
the Confederation of Indian Industry (CII) delegation to Bhutan
discovered last week, began an incredible story of support and common
benefits for both countries.
Bhutan has, since then, remained a
protectorate of India. And India, in turn, has been Bhutan’s
largest supporter (please see table 1). It is also the biggest trade
partner. In 2005, for instance, imports from India stood at Rs.1,280
crore, accounting for 75% of Bhutan’s imports. Likewise exports
from Bhutan to India during the same year stood at Rs.997 crore
(87.5% of total exports).
Table 1 – India
to Bhutan’s aid (in crore rupees)
|
|
Year
|
Total Allocation
|
India’s contribution
|
% of India’s contribution
|
|
1961-66 (1st Plan)
|
10.72
|
10.72
|
100.0
|
|
1966-71 (2nd Plan)
|
20.22
|
20.22
|
100.0
|
|
1971-76 (3rd Plan)
|
47.52
|
42.66
|
90.0
|
|
1976-81 (4th Plan)
|
110.62
|
85.30
|
77.0
|
|
1981-87 (5th Plan)
|
444.05
|
134.00
|
30.2
|
|
1987-92 (6th Plan)
|
950.00
|
400.00
|
42.1
|
|
1992-97 (7th Plan)
|
2,350.00
|
750.00
|
31.9
|
|
1996-2002 (8th Plan)
|
4,000.00
|
1,050.00
|
26.0
|
|
2002-08 (9th Plan)*
|
8,900.00
|
2,610.14
|
29.3
|
|
Notes: (*) Estimated
allocation for an additional year of the 9th Plan is Rs.1900
crore.
From the 3rd Plan onwards, Bhutan has
received financial assistance from other sources as well.
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But the most enduring bondings
between
India and Bhutan have been those related to hydro-electric (hydel)
power generation: Bhutan earns 30.2% of its export earnings through
the sale of electricity to India. This percentage is likely to soar
because both countries recently agreed to allow India to import
almost 5,000 MW of hydel power from this country by 2020 (The
potential estimated by Bhutan is 30,000 MW) as the latter enjoys the
twin blessing of a large number of rivers and a very low population
density.
That will benefit India in many
ways:
First, India can source
electricity at
tariffs that are lower than those of other new plants in India. This
is partly because power projects in India generally cost a lot more
on a per installed MW basis than most projects in other countries.
While it may not be fair to compare costs between hydel plants – as
each plant has significant variable costs on account of geological
terrain-related expenses – this is definitely possible with thermal
plants. These high capital costs translate into higher power tariffs
for India.
Table 2 - Power-packed
plans in Bhutan
|
|
Hydel power plants
|
Capacity in MW
|
Remarks
|
|
Jaldhaka
|
18
|
Exports most of its power to West Bengal
|
|
Chukha
|
336
|
Built by India at a remarkably low cost of Rs.246 crore.
Tariff for India recently hiked from Rs.1.5 per unit to Rs.2/unit
w.e.f. 1 Jan, 2005.
|
|
Kurichhu
|
60
|
Revised cost Rs.560 crore. Completed in 2002. Currently
exports surplus power to India at Rs.1.75/unit.
|
|
Tala
|
1,020
|
Estimated (revised) cost: Rs.4,327 crore. First turbine
began generating power in July 2006. Surplus power will be exported to
India at Rs.1.80/unit.
|
|
Punatsangchhu – I
|
1095
|
Draft implementation agreement between India and Bhutan
is under consideration.
|
|
Punatsangchhu –II
|
992
|
Preparation of DPR by WAPCOS, India, is underway.
|
|
Mangdechhu
|
660
|
Preparation of DPR by NHPC, India, is underway.
|
|
Basochhu Upper Stage
|
22.2
|
Commissioned in December 2001.
|
|
Basochhu Lower Stage
|
40
|
Turnkey project agreement signed in Sept 2001 with
Austrian Consortium.
|
|
Punatsangchhu – I
|
1,095
|
Expected commencement: 2012/2014
|
|
Mangdechhu
|
672
|
Expected commencement: 2015
|
|
Punatsangchhu – II
|
992
|
Expected commencement: 2015
|
|
Dagachhu CDM
|
114
|
Expected commencement: 2012
|
|
Note: (1) “chhu”
in Bhutanese means “river”
(2) The above list does
not include around 20 mini and micro hydel projects being planned
Source: Bhutan Power Corporation and
the CII
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Second, given the environmental
concerns about displacement of people and the damage to the ecology,
it is doubtful if any major hydel project will come up in India in
the near future. Under the circumstances, it would be prudent for
India to enter into such development plans with all its neighbouring
countries so that it could purchase hydel power at significantly
lower rates. In fact such a strategy would yield better dividends
when compared with the investments India seeks to make in oil
projects in politically unstable countries elsewhere.
A beginning has been made, a
relationship established. More hydel power plants in Bhutan could
strengthen ties even further in the coming decades.
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