When Pranab Mukherjee, President of India, landed in Bhutan on 7 November 2014, he became the first Indian President to visit Druk Yul, or the Land of the Thunder Dragon, in 26 years. More important, his visit came just within five months of the visit by Prime Minister Narendra Modi to Bhutan. This indicates the importance the small Himalayan kingdom holds for India.

One reason for this is the strategic location of Bhutan, sandwiched between India and China. Another more immediate reason is the huge hydropower potential of Bhutan, far more than its own requirements, which India sees as a source of cheap energy.

Hydropower dreams

Bhutan – like India’s own Himalayan states including Arunachal Pradesh, Sikkim, Uttarakhand and Himachal Pradesh – has large hydropower potential due its many and perennial rivers, steep slopes and snow and glacier reserves in the mountains. At the moment, their combined potential is assessed at close to 24000 MW. With the existing installed capacity being 1480 MW, only about 6 per cent of its potential has been realised.

Bhutan and India see the former’s hydropower potential as a win-win situation for both countries. Most of the hydropower development in Bhutan so far has been done with assistance from India, both technical and financial. The earliest project – the 336 MW Chhukha project – was developed with 60 per cent of the cost as grant and 40 per cent as loan from India to Bhutan.

Other projects that followed have a similar pattern, though the proportion of grants has been falling. Almost 75 per cent of the total electricity generation from these plants is being exported to India, earning valuable revenues and foreign currency for Bhutan, and providing India with cheap power.

Even after exporting so much of its generation, the per capita generation in Bhutan is a good 2536 units per capita. To compare, the per capita electricity generation in India in the same year was only around 760 units.

Hydropower exports provide more than 40 per cent of Bhutan’s revenues, and constitute 25 per cent of its GDP. Another 25 per cent contribution to the GDP comes in the form of hydropower infrastructure construction.

It is no wonder then, that Bhutan has ambitious plans for this sector. Bhutan’s so called 10/20 policy aims to create an installed capacity of 10000 MW in the country by 2020, building many hydropower projects in several river basins. India is expected to play a substantial role in both, supporting the creation of the capacity and in purchasing the power that will be generated.

Several projects under this program are already under construction. The 114 MW Dagachhu project is almost ready for commissioning, while the 1200 MW Punatsangchhu – 1, the 990 MW Punatsangchhu – II, and the 720 MW Mangdechhu projects are under construction.

Meanwhile, Pranab Mukherjee, in his address on 8 November 2014 at the Convention Centre in Thimphu, declared, “Hydropower is a classic example of the win-win cooperation between our countries…To build on our success, we have decided to also take up four more projects as joint ventures between public sector undertakings of India and Bhutan. The foundation stone for the first such project, the Kholongchhu, has, in fact, been laid by the Hon’ble Prime Minister of India during his visit to Bhutan in June 2014”.

Too much of a good thing?

However, there are increasing concerns about this path. Whether it is the fledgling democracy which is taking roots in Bhutan (the country got its first elected government in 2008 after the King gave up his powers and ushered in a democratic constitution), or the experience of the hydropower projects already constructed, there are several misgivings which are being voiced over the 10/20 path.

The first set of concerns centre around the many social and environmental impacts of the dams and hydropower projects.

Preserving the pristine country

Bhutan is unique in its quest for protecting its environment. Its constitution mandates that it must retain 60 per cent of its land under forest cover. It has a huge 52 per cent of its land under the protected areas network. But there are concerns that if the massive hydropower program is rolled out, there will be a big impact on biodiversity and environment. This is particularly so, because rivers represent the major sites of aquatic biodiversity.

For example, the Punatsangchhu project site was one of the habitats of the endangered White Bellied Heron. It is estimated that there are only 200 birds remaining globally. The construction of the Punatsangchhu projects has further destroyed the habitat of the Heron, and pushed it – and its predators – into a much smaller area, endangering it further.

More importantly, several experts point out that the rivers of Bhutan have amazing bio-diversity, much of which remains to be even properly identified and documented. They are concerned that the on-going and planned projects will severely impact the flora and fauna.

The projects will block the flow and connectivity in the rivers and alter the flow patterns, impacting aquatic life. Only one of the projects, the Kurichhu project, has a fish ladder. But the reports of its working are not optimistic.

Moreover, construction of the dams and the excavation of associated long tunnels, which carry the water from the dams to powerhouses several kilometres downstream, generate large volumes of muck and debris. In a visit to the Punatsangchhu river, we found that much of this muck was deposited on the banks of the river itself, sometimes even encroaching into and narrowing the river channel.

Though there were retaining walls in place to try and prevent the muck from entering the river, but given its sheer volume and the heights of the muck mounds, the walls were not likely to be effective. In fact, there were places where the muck had topped over the walls and entered the river. This would surely have a severe impact on polluting the river water and on aquatic life.

One important point made here by some people in Bhutan is that the country, being predominantly hilly, has very scarce flat land and the bulk of such plain areas stretch mainly alongside the rivers. Hence, hydropower projects are compelled to deposit muck and debris along the river itself. If this is true, then it does not bode well if more and more projects are taken up in each river basin.

It may be pointed out that during the Uttarakhand disaster of June 2013, some of the worst destruction was caused by the muck and debris deposited by dams which had been constructed there. Thus, any muck would also increase manifold the risk of damages in case of extreme flood events.

It is known that one of the consequences of climate change is likely to be an increase in extreme events – such as cloudbursts and intense rainfall over short periods – particularly in the Himalayas. Climate change is also likely to increase the frequency of Glacial Lake Outburst Flows (GLOF), already an existing risk in Bhutan.

There are several other serious social and environmental impacts of concern. Rivers drying up below dams as water is diverted into tunnels, the impacts  of operating turbines for generating peaking power which will in turn lead to extreme flow and water level fluctuations, and the cumulative impacts of many dams on one river are some of these.

Impacts of dams in Bhutan are also likely to be felt downstream in India; on the other hand, some areas of Bhutan that are downstream of dams planned in Arunachal Pradesh are likely to face the impacts of these dams.

One encouraging sign is that Bhutan is very concerned about its environment, and hence is well inclined to taking up mitigating or compensating measures. For example, in its recently released Water Regulation (November 2014) norms, Bhutan mandates a default 30 per cent environmental flow in rivers, in the absence of a scientific determination of flow requirement through an Environmental Impact Assessment (EIA).

However, on the downside, the capacity to undertake assessments, design mitigation measures and implement them is limited. As a result, much of the EIA and related work of Bhutan’s hydropower project is undertaken by Indian consultants, whose own track record at home is abysmal, with EIAs of shoddy quality.

But concerns go beyond this. Even with the best assessment capacities, people in Bhutan are now worried that if the large scale hydropower program is pushed ahead, with several dams in each river, no amount of mitigation or compensation will save the rivers. The land would end up losing its rare and pristine rivers, which many feel should be preserved for the coming generations.

It may not be out of place to mention here that Bhutan is the only county in the world that has rejected GDP (Gross Domestic Product) as the main measure of development and has introduced a nuanced and well–developed, multidimensional concept of Gross National Happiness (GNH). The GNH has four pillars, two of which are sustainable socio-economic development and environmental conservation. There is now increasing apprehension that the focus on hydropower development as a means of achieving the former many be harming the latter, and questions are being asked over whether the time has come to explore other options too.

All eggs in one basket

A recent editorial dated 31 October 2014 in Bhutan’s largest newspaper, the Kuensel,  following a major conference on Energy, Economy, Environment (E3), asks:

“Are we overinvesting in hydropower?  Are we drowning in hydropower?  Can we absorb such huge investments in a short span of time?  Are we neglecting other sectors?  These are questions emerging … in recent years, skeptics and critics started feeling that we may be trying to do too much too soon at the cost of other sectors.  There are reasons to worry.  With all attention given to the hydropower sector, some sectors are bearing the brunt of what is called ‘putting all eggs in one basket’… Hydropower is important.  In fact, investing in it is the best we can think of.  But we could do slowly and not bite off more than what we can chew.”

The Eleventh Plan document of the Bhutan Government notes that “lack of economic diversification has resulted in a situation of high growth rates driven by the hydropower sector, without a commensurate increase in gainful employment for a rapidly growing and educated labour force, which poses significant macroeconomic challenges.”

Moreover, as the Economic Development Policy, 2010 of Bhutan Government notes, “The economic growth is largely financed by external aid. The fiscal deficit is high, balance of payment situation is weak, public debt is mounting, and foreign exchange reserves are difficult to sustain as it is not built through exports.”

In addition to reliance only on one sector, there is also the dependence on one market, and one source of funds, namely India. And while the debt incurred for hydropower is largely eventually self-neutralising as it generates revenues, it does lock up the country into long years of high debt repayments. Thus, the linkage between economic development and hydropower, to a major extent, is a case of double dependence and there is need for diversification. Indeed, the very goal of Bhutan’s 11th Five Year Plan (2013-18) is “self-reliance and inclusive green socio-economic development”.

Pause and rethink

While hydropower development remains one of the cornerstones of economic policy of Bhutan, there is no doubt  that the twin issues of environmental destruction and the need to move away from over reliance on one sector is leading many people to say that  it is time to take a pause and re-think.

This would be a welcome development and one hopes that as and when such a rethink in Bhutan takes place, it will also encourage a similar process across the border in India, where mindless hydropower development in the Himalayas is destroying the rivers and impacting communities.


1. Druk Green

2. ADB Project Case Study