Strengthening Regional Energy Security: India and Bhutan’s High-Voltage Partnership Unveils Punatsangchhu-II Unit 3

New Delhi: The launch of Unit 3 of the 1020 MW Punatsangchhu-II project is a significant step forward for India-Bhutan hydropower collaboration. Bhutan heavily relies on hydropower exports, driving its economy, while India incorporates this electricity into its clean energy strategy. This partnership is more than just a trade agreement; it plays a vital role in ensuring regional energy security.

Ambassador Sudhakar Dalela highlighted the benefits during the commissioning ceremony on March 19. He told Bhutanese news outlet Kuensel that the project would not only boost Bhutan’s economy by creating jobs and generating revenue, but it would also enhance the renewable energy supply for India.

The ceremony, held at the site of the project, was attended by several key figures from Bhutan’s government. In December 2022, the first two units of the hydropower project, each with a capacity of 170 MW, were officially launched.

So far, India and Bhutan have collaborated on four major hydropower projects: Chukha (336 MW), Kurichhu (60 MW), Tala (1020 MW), and Mangdechhu (720 MW). The Punatsangchhu-II project alone is set to increase Bhutan’s power capacity by nearly 40%, significantly aiding its economic progress.

The Punatsangchhu project offers a unique run-of-the-river system in Bhutan’s Wangdue Phodrang district. Funded entirely by India, with 30% as a grant and 70% as a loan at a 10% annual interest rate, the project costs approximately ₹37,778 million. Expert consultancy services were provided by India’s Water and Power Consultancy Services (WAPCOS) during its phases.

Work on the project began in December 2010 with an ambitious seven-year completion goal. However, delays due to natural challenges like floods and the COVID-19 pandemic pushed the expected completion to October 2025.

Ambassador Dalela emphasized the ongoing commitment to enhancing energy cooperation as both nations work to increase efficiency and sustainability in their projects. Hydropower plays a crucial role in Bhutan’s overall economy, providing significant revenue for the government.

Under a bilateral agreement signed in 2006 and updated in 2009, both countries are committed to cooperating in energy. Currently, four hydropower projects are operational in Bhutan, supplying electricity to India. Also in the pipeline is the 1200 MW Punatsangchhu-I project.

While there have been concerns about Bhutan’s potential shifts toward China, experts like Harsh V Pant interpret these relations as stable and rooted in long-term mutual benefits. He believes hydropower cooperation strengthens regional security while Prabir De from the Research and Information System for Developing Nations highlights the bilateral benefits of power trade, suggesting that India pays more than market rates for Bhutan’s power.

Energy cooperation among India, Bhutan, Bangladesh, and Nepal is strengthening the regional grid, enhancing energy security across South Asia. With a population of around 1.73 billion and a GDP of $5.2 trillion as of 2023, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) plays a crucial role, making India-Bhutan energy projects landmark initiatives for cooperation in the region.

Overall, Bhutan’s advancements in hydropower serve as a testament to the idea that energy security equates to regional stability, driven by a shared vision for the future.

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