Bhutan exports electricity worth over Nu 11.6bn to India

Bhutan exports about 75.5% of electricity generated in the country to India

Bhutan exported electricity worth over Nu 11.6bn in the last nine months, according to the department of hydropower and power system. As of September, the four hydropower plants including the Chhukha hydropower plant, (CHP) Tala hydropower plant, (THP) Dagachhu Hydropower Corporation (DHPC), and Mangdechhu Hydroelectric Project (MHCP) exported around 3.8MU.

A total of 1.6bn units of electricity were sold in nine months. From respective hydropower plants, the power tariff for export to India is Nu 2.55 per unit for the CHP, Nu 2.12 per unit for the Kurichhu Hydropower Plant (KHP) and THP, and Nu 3.078 per unit for DHPCL with an annual escalation of 2%.

However, the monthly statistical report of the Royal Monetary Authority (RMA) also states that the revenue generated through the export of electricity from five hydropower plants, excluding Basochhu hydropower (BHP), decreased by approximately 3% as of September this year as compared to 2021.

Despite a 1.4% gain in September exports compared to the same month last year, the total exports for the nine months (January-September) have declined by Nu 689mn compared to the same period last year.

As of September, this year, the report states that the nation generated about Nu 18.5bn through the export of power to other nations, a 3% decline from last year. The nationโ€™s power exports brought in about Nu 19.2bn last year.

However, the five hydropower plants including Tala, Chhukha, Kurichhu, Mangdechhhu, and Dagachhu plants have exported about Nu 18bn worth of electricity in nine months this year.

The Tala Hydro Power (THP) produced the most power in September this year producing 773.34 MU (Million Units), followed by Mangdechhu Hydro Power Plan Authority (MHPA) with 482.06MU.

Similarly, THP, despite not being operational for about two months (January and February), generated the highest power till September this year with 3495 MU followed by MHCPA with 2481 MU and the least generated power plant was Kurichhu Hydropower (KHP) with just 315 MU.

A rough calculation shows that the revenue collected from sales of domestic consumption was about Nu 2.7 bn as of September this year followed by Nu 2.9bn in 2021. It has decreased by 6.4%.

The lack of domestic sales of power from THP in January and February, followed by no domestic sales of power from DHPC this year, is to blame for the decline in domestic sales.

Meanwhile, the power tariff for domestic sales is Nu 0.13 per unit for royalty energy (15% of the total to the government; revised from Nu 0.3 per unit from August 2010) and Nu 1.20 for the rest (industrial use mainly from KHP).

Similarly, BHP sales are to CHP at Nu1.59 per unit (revised from Nu.1.39 in May 2017). Domestic sales are exclusive of demand/wheeling charges at the rate of Rs 9.23 per unit during the period, according to the NEA.

In the first two months of the current fiscal year, electricity worth Rs 4.42bn was exported, said the authority.

According to the Public Debt Situation Report for September, almost three-fourths (71%) of the external debt was on account of debt contracted for financing hydropower projects in the country.

An official from the Finance Ministry shared that the major portion of external debt is on account of hydropower projects which are deemed commercially viable, with a ready export market in India. In addition, 95.5% of the hydro debt is denominated in INR, which does not pose any exchange rate risks as ngultrum is pegged at par with INR.

He added that hydro debt constitutes 71% of total external debt and hydropower debt carries or bears low risk as debt servicing for hydropower loans from India starts only a year after the commissioning of the project. This ensures revenue inflow before debt servicing starts, thus mitigating liquidity risk.

โ€œExport tariff for electricity is set by considering the overall cost of the project, including the projected debt servicing cost. This implies that the revenue from the sale of electricity would provide adequate cushion for debt servicing,โ€ he shared.

Meanwhile, Bhutan exports about 75.5% of electricity generated in the country to India which is about 117,715.31 Gigawatt hours (GWh) of the total power generation of 155,925.81 GWh, according to Bhutanโ€™s Richness Experiences in Cross Border Electricity Trade, 2022 report.

The report states that electricity is also exported to India via 15 transmission lines, including 10 400kv (Kilovolt) transmission lines used for bulk export. These lines are operated under various types of power purchase agreements.

The report states that Bhutan is the only south Asian country that exports 80% of electricity generated to India. The export of electricity has boosted not just economic growth but also significantly influenced the socioeconomic development of the nation and raised its GDP.

Further, a bilateral agreement was signed between Bhutan and India on March 23, 1974, for the development of the 336 MW Chhukha hydropower project and the development of several mega hydropower projects.

Tshering Pelden from Thimphu