India signs agreement with Bhutan for 600 MW hydroelectric project

India and Bhutan signed concession agreement on the 600 MW Kholongchhu hydroelectric project (KHEL). The hydroelectric project will be the first-ever joint venture project to be implemented in Bhutan. The joint venture partners of the project are India’s Satluj Jal Vidyut Nigam Limited (SJVNL) and Bhutan’s Druk Green Power Corporation Limited (DGPC). It will be implemented by Kholongchhu Hydro Energy limited, a joint venture company formed between Drunk Green power Corporation(DGPC) of Bhutan and Satluj Jal Vidyut Nigam Limited(SJVNL) of India. The 600 MW run-of-the-river project is located on the Kholongchhu River in Trashiyangtse District in Eastern Bhutan. The underground powerhouse has four 150 MW turbines with water impounded by a concrete gravity dam of 95 meters height. Hydropower sector is the flagship area of India-Bhutan bilateral cooperation. The 720 MW Mangdechhu hydroelectric project was inaugurated by the Prime Ministers of India and Bhutan in August 2019. With this, 4 hydroelectric projects of bilateral cooperation (336 MW Chukha HEP, 60 MW Kurichhu HEP, 1020 MW Tala HEP and 720 MW Mangdechhu HEP), totaling over 2100 MW, are already operational in Bhutan.

India-Bhutan Bilateral Hydropower Projects

• With the signing of the concession agreement, construction work will begin in the Kholongchhu hydroelectric project.
• This is the 5th hydroelectric project under bilateral relations between the governments of India and Bhutan.
• The Mangdechhu hydroelectric project was inaugurated by Prime Minister Narendra Modi in August 2019.
• Mangdechhu hydroelectric project is 720 MW. The Tala hydroelectric project is the largest hydroelectric project in Bhutan with 1020 MW.
• The Tala hydroelectric project has been operational since 2007 and was funded through grants from India.

Significance:

Concession Period

• The Government of India will provide, as a grant, the equity share of the Bhutanese DGPC in the JV Company.
• Once the project is commissioned, the JV partners will run it for 30 years, called the concession period, after which the full ownership will transfer to the Bhutan government, which will receive power from the project as a royalty.

Bilateral Cooperation

• The tapping of hydropower in Bhutan would pave a way for successful bilateral cooperation and mutual engagement between India and Bhutan.

Strategic Interest

• Being a member of BIMSTEC, Bhutan holds geostrategic importance for India.
• The shared sense of support and help in terms of such development projects between the two countries can help India in executing its Act East-Look East Policy.

Energy Trade

• The project would act as a milestone in generation of energy and related trade.
• The project would aid in a clean and stabilising power source for India and also contribute to its renewable energy targets.

Employment Opportunities

• Commencement of construction activities of the project will create economic and employment opportunities in Bhutan.
• India needs to focus on the youth of Bhutan, as it is the youth only, which would take the people-to-people contact forward in the future.

Economic Growth

• The plant would drive economic growth and hence socio-economic development would be facilitated in Bhutan.

UPSC