Bhutan boost economy by powering India

THIMPHU (BHUTAN)- Its giant neighbour India has a burgeoning economy that is power-hungry, while what this Himalayan kingdom has are swift rivers that pack more than a punch.

So tiny Bhutan, with a new government looking for ways to grow the country's economy, is not hesitating to tap its hydropower potential in collaboration with India. It hopes to increase the amount of electricity generated from the current 1,500MW to 10,000MW within seven years.

The picture is different next door in Nepal, with the same hydropower resources. It suffers from acute shortage of electricity with power outages extending to 12 hours, crippling businesses.

Its rivers have been able to generate just 660MW of the potential 40,000 MW of electricity because of prolonged political instability and its people's anti-India sentiments, which have led to stalled projects, including some India-backed ones. India is seen by Nepalese as a big brother that interferes with their internal affairs.

Nepal's national income per capita of US$610 (S$772) is way smaller than Bhutan's at US$2,292.

Bhutan's Prime Minister Tshering Topgay, who came to power five months ago in only the second general election in the kingdom, has made hydropower a priority on his to-do list. "Right now, our economy is so weak and so small, all I can say is thank heavens for hydropower. It's going to allow us to develop our country and strengthen our economy," he told a group of visiting journalists recently.

"The only question is: are we going to use it wisely. I certainly intend to use the opportunity of this god-given resource."

Next April, the Dagachhu power plant, started in 2009 and with a capacity of 126MW, will be commissioned.

Built with funds from the Asian Development Bank and a host of other partners including Indian conglomerate Tata Power, it is the country's first foreign direct investment project. It will sell all the power generated to India.

Two massive projects in western Bhutan, also being built in collaboration with India, will have a total capacity of 2,190MW.

In all, there are 10 hydropower projects, some under construction and some yet to be started. The government will not start new projects but complete these.

Bhutan, with a population of 700,000, has restricted its exposure to the world. Long seen as a mysterious, cloistered country, it held parliamentary elections for the first time in 2007 after 100 years of monarchic rule.

The country has favoured its much-admired Gross National Happiness (GNH) over gross domestic product (GDP) as a measure of growth. GNH gauges the happiness of the people on parameters such as quality of life and preservation of the environment.

Yet, unlike in neighbouring India where building of dams has been resisted by green activists, Bhutan has no such problem.

People living in the vicinity of the Dagachhu project have few complaints. Instead, they are happy that it has led to new roads and better business for local shops. Ms Sangay Dema, 51, a shopkeeper, is one such beneficiary. "My earnings have gone up three-fold. I don't have any problem with the power plant. The roads are also better," she said.

Bhutan's drive to develop hydropower is helped by its friendly relations with India.

"For Bhutan, India has given a sweetheart deal... offering to fund the hydropower projects and buy power at attractive rates," said Ms Lydia Powell from Delhi-based think-tank Observer Research Foundation.

However, there are concerns about over-reliance on hydropower and the impact of climate change on its water resources.

"We are trying to diversify," said Mr Lam Dorji, planning secretary in the government. One key sector is tourism. Foreign tourist arrivals have burgeoned, from 64,028 in 2011 to 105,407 last year. But the government wants to concentrate on high-end, low-volume tourism, in keeping with the principle of happiness over profit, so restrictions are in place to control tourist inflows.

The prime minister is sanguine about relying on hydropower. "We as a country, we would be fools if we don't take advantage of hydropower. It is a gift and a boon, not a curse."

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