INDIA–BHUTAN COOPERATION ON TRANS-BOUNDARY RIVERS AND HYDROPOWER PROJECTS

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Picture Courtesy:  PIB

Context

The Indian delegation, led by the Secretary of the Department of Water Resources, visited Bhutan to discuss cooperation on trans-boundary rivers and review the Punatsangchhu-I Hydro Electric Project.

What are the Key Outcomes of the India-Bhutan Delegation Review?

Hydropower Cooperation

• Punatsangchhu-II (1020 MW): Expected to boost Bhutan's export capacity and aid India’s grid stability during peak summer demand.
• Punatsangchhu-I (1200 MW): Technical solutions to stabilize the right bank, which has faced severe delays due to geological instability. 

Flood Management and Data Sharing (Non-Power Water Cooperation)

• Modernization: Agreement to modernize the hydro-meteorological observation network in Bhutan.
• Data Sharing: Enhanced, real-time data-sharing mechanisms established for flood forecasting. 
• Institutional Linkages: Technical exchange for Hydrology and Meteorology (NCHM) and flood monitoring stations.
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How the India-Bhutan Hydropower Model Evolved?

Hydropower cooperation is based on two main agreements: the 1949 Treaty of Friendship (updated in 2007) and the 2006 Agreement on Cooperation in Hydropower.

Hydropower development has shifted from direct government aid to joint ventures and public-private partnerships.

• Stage 1 =>  Inter-Governmental (IG): Fully funded by the Government of India, initially with a 60% grant and 40% loan, later revised to a 30% grant and 70% loan. Executed by Indian PSUs.
• Stage 2 => Joint Venture (JV): A 50:50 partnership between Indian and Bhutanese Public Sector Undertakings (PSUs). Focuses on shared risk and commercial viability.
• Stage 3 => Public-Private / Hybrid: Involves Indian private sector companies and international financial institutions to diversify funding and bring in new expertise.
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What is the Strategic Significance of Water Cooperation?

Geopolitical Importance

India and Bhutan share trans-boundary Brahmaputra tributaries like Manas, Sankosh, and Torsa. Coordinated management is vital for flood control in downstream Indian states such as Assam and West Bengal.

Economic Lifeline for Bhutan

Hydropower is Bhutan's economic backbone, contributing 14% to GDP and 26% to government revenue, with power exports to India as the main income source. (Source: Asian Development Bank)

Climate Change Imperative

Faster Himalayan warming escalates the risk of Glacial Lake Outburst Floods (GLOFs). Joint early warning systems are crucial for disaster risk reduction.

What are the Challenges in the Partnership?

Geological Fragility

The Himalayas are a young and tectonically active mountain range. The delays and cost escalations in the Punatsangchhu-I project highlight the challenge of unexpected geological issues.

Climate Change Impact

Erratic monsoon patterns and receding glaciers pose a long-term threat to the viability of hydropower. A  ICIMOD study warns that river flows in the Hindu Kush Himalayas may peak around 2050 and then decline, affecting energy generation.

Bhutan's Macroeconomic Concerns

While hydropower loans are self-liquidating, Bhutan’s high debt-to-GDP ratio (around 120%) has prompted it to seek more favorable financing terms for future projects like Dorjilung.

The Geopolitical Angle

China's increasing engagement with Bhutan through boundary talks and economic aid requires India to ensure timely and efficient delivery of its projects to remain Bhutan's "partner of choice."

Way Forward

Diversify the Energy Basket

Complement hydropower with solar and wind energy. The International Solar Alliance (ISA) can help develop floating solar projects on existing reservoirs.

Promote Sub-Regional Cooperation

Fully operationalize the BBIN (Bangladesh, Bhutan, India, Nepal) framework for trilateral power trade. Bangladesh's interest in investing in Bhutan's Dorjilung project is a positive step.

Institutionalize Flood Management

Upgrade the existing Joint Group of Experts (JGE) into a permanent "India-Bhutan River Basin Commission" with the authority to make real-time decisions on water management during monsoon floods.

Align with Bhutan’s Vision

India must ensure that its infrastructure and energy support for Bhutan's Gelephu Mindfulness City (GMC) project provides the reliable power and water connectivity required for it to succeed as a regional economic hub.

Conclusion

Water is the bedrock of the India-Bhutan relationship, but in an era of climate change and shifting geopolitics, the partnership must evolve. By reinforcing traditional hydropower with disaster resilience, sub-regional energy trade, and integrated river basin management, both nations can ensure a sustainable, prosperous shared future.

Source: PI