Bhutan: South Asia Subregional Economic Cooperation Green Power Investment Program

Energy / Energy sector development and institutional reform

The proposed investment program is a multitranche financing facility (MFF) to support development of the Nyera Amari run-of-river hydropower plant and a transmission system. The power generated from the plant can be supplied through the eastern grid network system for dual purposes of export and domestic consumption. This approach will make a geographical balance in development support from the Asian Development Bank (ADB), following the Dagachhu hydropower plant (126 MW) in the western region, and the Nikachhu hydropower plant (118 MW) in the central region. While the eastern region has the highest population among the regions, it has been less developed in overall infrastructure, and is more likely to be poor than other regions. The government of Bhutan aims for balanced regional development, which is to ensure that inclusive development is equitably spread across the country.

The government regards its continued hydropower development as the country's economic key driver that will help maximize local, national, and regional development impacts. Hydropower generation contributes to one-fifth of the country's gross domestic product. Out of Bhutan's installed generation capacity (1,614 MW), about 75% is exported to India after meeting domestic electricity demand. The hydropower exports account for one-third of government revenue; they are primary source for government spending on socioeconomic development for social services such as health, education, and rural development. Hydropower development forms the foundation of the economy and social system in Bhutan.

(i) Hydropower plant's first stage constructed,

(ii) Eastern grid network strengthened, and

(iii) Hydropower plant's second stage constructed.