PTC India Ltd, India’s largest electricity trader, will buy surplus power from Bhutan government-run Druk Green Power Corp. Ltd, which runs the 720 megawatts (MW) Mangdechhu hydropower project.
“PTC India Ltd (PTC) signed power purchase agreement (PPA) with Druk Green Power Corp. Ltd (DGPC, A Royal Bhutan Govt. Company) for purchase of surplus power from 720MW Mangdechhu hydro electric project in Bhutan for 35 years. Government of India has designated PTC as the nodal agency from Indian side to purchase this power from Bhutan," PTC said in a statement on Monday evening.
Prime Minister Narendra Modi inaugurated the major hydropower project during his recent visit to the strategically located Himalayan nation as part of the National Democratic Alliance (NDA) government’s “neighbourhood first" policy.
Electricity from the run-of-river power plant built on the Mangdechhu River in Trongsa Dzongkhag district of central Bhutan will be supplied to Assam, Bihar, Odisha and West Bengal.
Cross-border energy trade is a key part of Modi’s South Asia-focused, neighbourhood-first policy. India has also been playing a key role in creating a new energy security architecture for its neighbours to counter China’s Belt and Road initiative aimed at connecting countries across Asia, Africa and Europe.
“The project is funded by a mix of debt and grant from Govt. of India. The project is estimated to generate 2,923 GWh (2.923 BUs) of electricity and offset 2.2mt of CO2 a year. The generated energy will be transmitted to India through Jigmeling and Salakati sub-stations," the statement added.
Bhutan, strategically located between India and China, has the potential to generate 30,000MW of hydropower, but has a capacity of just 1,490MW. According to the Indian embassy in Thimphu, hydropower exports provide more than 40% of Bhutan’s domestic revenues, and constitute 25% of its gross domestic product (GDP).
“With commissioning and starting of supply from Mangdechhu, PTC will be managing around 2,130MW of hydro capacity from Bhutan. The hydro power shall help in meeting dual objective of green power requirement and negligible environmental impact. PTC’s relationship with RGoB goes back to 2002 when Chukha HEP power was assigned to PTC. This arrangement of power trading has resulted in strong mutually beneficial relationship between two neighbouring countries," Deepak Amitabh, chairman and managing director, PTC India, said in the statement.
India has been supplying electricity to Bangladesh, Nepal and Myanmar. India is also pitching for a global electricity grid at the first general assembly of the International Solar Alliance (ISA), and has also been championing for a South Asian Association for Regional Cooperation (Saarc) electricity grid, which would meet electricity demand in the region.
Modi on Sunday outlined a new blueprint for cooperation between India and Bhutan that would add a fresh dimension to the ties so far dominated by the hydel power sector.
Modi’s trip was his first to Bhutan since the China-India military face-off in 2017, triggered by an intrusion by Chinese troops into territory claimed by Bhutan. It aims to diversify India’s partnership with the kingdom from cooperation in hydropower and enhanced trade to linkages in space, health and education. It comes in the backdrop of efforts by Beijing to woo Thimphu, and calls within sections of the Bhutanese political establishment for stronger diplomatic ties with China, and a shift away from its hydel power ties with India.
As part of India’s economic diplomacy, including efforts to exert strategic influence in its neighbourhood with infrastructure development, New Delhi is helping Bhutan build 10,000MW of hydropower with concessional finance, and an overall investment of about $10 billion.