Hydropower Cooperation

Hydropower projects in Bhutan are an example of win-win cooperation, providing a reliable source of inexpensive and clean electricity to India, generating export revenue for Bhutan and cementing our economic integration.

  • So far, Government of India has constructed three Hydroelectric Projects (HEPs) in Bhutan totaling 1416 MW (336 MW Chukha HEP, 60 MW Kurichhu HEP and 1020 MW Tala HEP), which are operational and exporting surplus power to India About three-fourth of the power generated is exported and rest is used for domestic consumption.
  • The ongoing cooperation between India and Bhutan in the Hydropower sector is covered under the 2006 Agreement on Cooperation in Hydropower and the Protocol to the 2006 agreement signed in March, 2009. Under this Protocol, Government of India has agreed to assist Royal Government of Bhutan in developing a minimum of 10,000 MW of hydropower and import the surplus electricity from this to India by the year 2020.
  • Currently, there are three Inter-Governmental (IG) model HEPs viz. 1200 MW Punatsangchhu-I, 1020 MW Punatsangchhu-II and 720 MW Mangdechhu under implementation.
  • In April 2014, an Inter-Governmental Agreement was signed between India and Bhutan for development of four more HEP’s of capacity 2120 MW (600 MW Kholongchhu, 180 MW Bunakha, 570 MW Wangchhu and 770 MW Chamkharchhu) under the Joint Venture Model. These projects will have both the JV partners owning 50:50 shareholdings each in the JV- company. Debt-equity ratio would be 70:30, with equity shared equally between JV partners. Further, MEA is providing Druk Green Power Corporation’s (Bhutanese) share of equity as grant.

India-Bhutan Friendship Treaty: 1949

On August 8, 1949 Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs. However, Bhutan agreed to let India “guide” its foreign policy and both nations would consult each other closely on foreign and defence affairs. The treaty also established free trade and extradition protocols. Scholars regard the effect of the treaty is to make Bhutan into a protected state, but not a protectorate, because Bhutan continues to have the power to conduct its own foreign policy.

India-Bhutan Friendship Treaty: 2007

  • India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007. The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.
  • In 2008, India’s then Prime Minister Dr Manmohan Singh visited Bhutan and expressed strong support for Bhutan’s move towards democracy.
  • India allows 16 entries and exit points for Bhutanese trade with other countries (the only exception being the PRC) and has agreed to develop and import a minimum of 10,000 megawatts of electricity from Bhutan by 2021.

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