In what could be called a move taken in anticipation of the current Middle- East conflict, Bhutan strengthened its energy resilience following a series of high-level bilateral consultations with India’s leading public sector oil companies towards the end of February 2026. In a meeting held with Indian stakeholders, strategic partnership between Bhutan and India in the energy sector was deepened. It also underscored both countries’ shared commitment to ensuring stable, efficient and transparent fuel supply systems.
The consultations were convened by the Department of Trade under the Ministry of Industry, Commerce and Employment of the Royal Government of Bhutan and brought together senior Bhutanese officials and executives from India’s major public sector oil companies — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL).
Led by the Chief Trade Officer of the Internal Trade Promotion and Facilitation Division under the Department of Trade (DoTr), alongside executive directors from the three Indian oil companies, the discussions served as an important platform to review operational issues, reinforce petroleum supply arrangements and explore ways to modernise infrastructure and regulatory systems across Bhutan’s fuel supply chain.
Officials from the DoTr noted that the consultations reaffirmed the long-standing government-to-government cooperation underpinning petroleum trade between the two countries. Through the meeting, Indian oil companies reiterated their commitment to providing reliable and timely supplies of petroleum products to Bhutan. “Any policy or operational developments in the Indian petroleum market have a direct impact on Bhutan’s fuel supply,” officials said, adding that ongoing dialogue allows both sides to anticipate potential issues and maintain stability in the domestic market.
During the discussions, Indian oil companies agreed to align several operational processes with Bhutan’s evolving taxation and regulatory frameworks. Officials described this as an important step toward enhancing transparency, strengthening compliance and improving the efficiency of petroleum trade between the two countries.
The consultations also highlighted the growing role of Indian public sector companies in supporting Bhutan’s petroleum infrastructure development. Over the years, collaboration with these companies has contributed to the establishment and modernization of retail fuel outlets across the country.
IOCL remains the principal supplier of motor spirit (petrol), high-speed diesel and liquefied petroleum gas (LPG) to Bhutan. The company also provides infrastructure support and technical expertise to Bhutanese dealers. During the consultations, Indian Oil committed to upgrading canopies at retail outlets and installing heavy dispensing units, particularly in high-traffic areas and border towns.
BPCL supplies motor spirit and diesel to several retail outlets in Bhutan. The company has also extended credit facilities to Bhutanese fuel dealers through business-to-business arrangements. In addition, Bharat Petroleum has supported site beautification initiatives and canopy installations aimed at improving service conditions at retail outlets.
HPCL has steadily expanded its retail presence in Bhutan in recent years. The company currently operates 12 fuel retail outlets across the country and has expressed readiness to support new projects and infrastructure upgrades.
A key outcome of the consultations was an agreement to introduce location-specific invoicing for petroleum supplies, particularly in relation to the Gelephu Mindfulness City (GMC).
Bhutan introduced the Goods and Services Tax (GST) from January 1, 2026, under which petroleum products fall within the GST framework. However, GMC currently operates under the Bhutan Sales Tax (BST) regime as part of its special economic and development framework.
To address this dual taxation system, Indian oil companies agreed to issue invoices based on dealer indents and delivery locations. This means that supplies destined for GMC and other regions will be invoiced according to the applicable tax system.
Officials said this measure will help ensure full compliance with Bhutan’s taxation policies, provide clarity for dealers and regulators, and reduce administrative disputes. Regional Revenue and Customs Offices (RRCOs) will also be able to accurately compute applicable taxes by clearly distinguishing between GST and BST transactions.
Another important outcome of the consultations was the commitment by Indian oil companies to share three-year export data for key petroleum products supplied to Bhutan.
Although not a mandatory requirement, the data will allow Bhutanese authorities to cross-verify import records, improve demand forecasting and monitor long-term consumption trends.
Officials said access to such data will strengthen evidence-based policymaking in the energy sector, enabling authorities to better plan infrastructure investments and anticipate future supply requirements.
The DoTr added that new retail outlets are being considered in underserved areas including Chamkuna, Samtse and Lhamoizingkha. Multi-purpose dispensing units are planned for Trashiyangtse, while canopy installations in Haa and Tsimakoti are targeted for completion by February 2027. A canopy installation in Zhemgang is expected to be completed by May 2026.
Officials said these improvements will enhance safety, reduce congestion at busy fuel stations and improve service speed, particularly for heavy vehicles.
Improving logistics coordination was another focus of the discussions. Indian oil companies expressed readiness to facilitate smoother entry of materials required for infrastructure upgrades and to assist with labour coordination for installation and maintenance works.
Such measures are expected to strengthen supply reliability, especially in remote and mountainous regions where transportation challenges often affect fuel distribution.
The companies also agreed to support Bhutan’s efforts to procure sulfur testing equipment and provide technical training for officials and fuel dealers.
The installation of sulfur testing equipment at the Thingchupangkha POL depot laboratory will enable Bhutan to conduct in-country testing of Bharat Stage VI fuel standards, ensuring that sulfur content remains within the permissible limit of 10 parts per million.
Officials said this will strengthen environmental compliance, enhance consumer protection and build domestic technical capacity for fuel quality monitoring.
The government confirmed that bilateral consultations with Indian oil companies are already institutionalised under the existing MoU framework and will continue to be held on a regular basis.
Regular visits by technical and managerial officials from Indian oil companies to Bhutan are also expected to further strengthen cooperation and facilitate knowledge sharing.
Tashi Namgyal
From Thimphu
