Bhutan's new hydropower policy

Bhutan's new hydropower policy is driven by growth in domestic demand for electricity and the Himalayan kingdom seeking to explore trilateral regional, sub-regional and regional cooperation in developing hydropower projects in the country. Termed as Sustainable Hydropower Development Policy 2021, the new policy replaces the country's hydropower policy of 2008. Assam sharing 267 km of India-Bhutan borders along the downstream areas of the tributaries of the Brahmaputra flowing from the neighbouring country, the policy outcomes will have ramifications for the state. Bhutan's installed capacity is 2326 Megawatts (MW) which has been achieved over four decades. The Power System Master Plan 2040 for the country estimates the overall hydropower potential of Bhutan to be around 36,900 MW with annual production capability of 154,000 gigawatt hours (GWh). The policy document states that domestic demand of Bhutan is increasing at a rate which may soon exceed generation/firm capacity and the country, therefore, is required to augment its capacity to generate electricity. One of the objectives of the policy is to enhance national revenue through sale of surplus electricity. Bhutan exports 70 per cent of hydropower generated by the county to India. The World Bank estimates that export sales of hydropower to India account for 27 per cent of Bhutan's government revenues and 13 per cent of its Gross Domestic Product. The policy vests ownership of all hydropower projects with Royal government of Bhutan while the government will encourage private sector to venture into hydropower-related ancillary business and services. A key focus in the new policy is to accord priority to reservoir-based and pumped storage hydropower projects. The existing power projects being run-of-river technology Bhutan has to import electricity during lean season and hence the shift in the new policy. It also provides for government encouraging multipurpose hydropower projects where it is techno-economically feasible for flood control, irrigation and for providing drinking water purposes. The policy stipulates that Bhutanese will be given preference for employment in projects to the extent possible, based on their skills and capability and only after exhausting the provision, foreign partners will be allowed to bring inexpatriate personnel during the time of construction in accordance with prevailing laws of the country. Design and construction of infrastructure works like access roads, bridges, residential and non-residential buildings, water supply schemes, electricity distribution supply networks, etc. shall be awarded only to the local firms. The provision of mechanisms to be built in the contract documents to source locally available construction materials and ensure maximum benefits are accrued to Bhutanese suppliers, transporters, contractors, manufacturers, and other service providers will also create economic opportunities for the local which will help the Royal government to gather consent of the communities for the hydropower projects. Exemption of all plants, construction materials, equipment, machinery, and services imported for direct use in the construction of projects including associated transmission systems from any levies, taxes and duties can be expected to be a huge incentive for the hydropower developers. The policy mandates the Royal Government to ensure that hydropower development, generation and transmission are in line with the environmental legislations of the country and initial pre-feasibility study for environmental aspects shall be carried out by the royal government agencies concerned. The developer shall be required to carry out comprehensive Environment Impact Assessment in accordance with the environmental legislations of the country and the Bhutan Hydropower Guidelines 2018 and subsequent amendments. Bhutan's National Forest Policy Goals call for managing forest resources and biodiversity sustainability to produce a wide range of social, economic, and environmental goods and services for the equitable benefit of all citizens and natural environment while still maintaining a minimum of 60 per cent of the land under forest cover thereby contributing to Gross National Happiness. Balancing the goal of 60 per cent land under forest cover and pursuing the hydropower goal will be a monumental challenge for the Himalayan country. Conservation of forest and environment in Bhutan is critical to entire Himalayan landscape and a mismatch of these two national goals will increase climate change vulnerability in the entire region including Assam and Arunachal Pradesh. The hydropower development in upper reaches has cumulative downstream impact. India will have to allay apprehensions in Assam, more particularly of people living in Bodoland Territorial Council that hydropower goal of Bhutan will not have adverse transboundary and downstream impact. Melting of Himalayan glaciers in Bhutan under climate change impact is going to be another critical area of environment concern that will need to be addressed before aggressively pursuing the new hydropower policy. A comprehensive assessment of the cumulative downstream impact of the proposed hydropower projects in Bhutan before rushing with implementation of the new policy will help building trust and cooperation. Bhutan's new policy is expected to trigger a new discourse on hydropower diplomacy between India and Bhutan.