If the de facto position as it
stands today is anything to indicate, Bhutan is under the
'electricity-colonization' of India. No matter what one may put in, in reality,
under the guise of friendship, knowing the geopolitical reality of Bhutan, India
for her own interest has manage to squeeze undue benefits from the hydropower
cooperation with Bhutan. It's a common sense to simply understand why Bhutan's
hydroelectricity is meant to service India.
The billions of ngultrum that are
pumped into for construction of hydropower projects in the country are almost
all drained off to India as everything is provided by India. The contractors,
consultants, professionals, management of projects, technology and products are
India-tied and India takes the lion’s share of benefits during the construction
stage. There’s little Bhutan could gain during the construction phase.
If we recall, during the tariff
fixation of Tala project, India didn’t budge to give in for a justifiable
electricity price & pricing mechanism as it was evident from many rounds of
frustrating talks (more than 10 rounds) between the officials of India and
Bhutan. India has always played upper hand on deciding electricity tariff as
Bhutan has no means to negotiate.
While some major hydropower projects
in India (E.g. Teesta Hydropower Project) are developed in partnership with
foreign companies from abroad, all mega hydropower projects in Bhutan is circuitously
conditioned to be pure Indian version. In other words, Bhutan has become the
place of testing and experimentation of India’s technology and products, while
India herself enjoys the advance technology and products from abroad. Bhutan
has no autonomy over the business of electricity on her own land; not even in
equal terms of a State in India.
Some efforts are being made by the
govt. of Bangladesh to partner with Bhutan for development and trade of
electricity but to no avail not because Bhutan is not interested but mere fact
that it’s under India’s control. At one time, Lyonpo Sangay Ngedup, the then
the Prime Minister of Bhutan, had tough time answering to a query by a notable Bangladeshi
journalist on why Bhutan cannot cooperate with Bangladesh on electricity. After
a momentarily pause and careful thought, he replied, “At the moment we are comfortably
arranged with India.” The SAARC Energy Grid proposed by member nations also saw
a deadlock with India (Big brother of SAARC) showing no interest for obvious
reasons. If SAARC Energy Grid comes through, Bhutan is likely to enjoy the free
market price of electricity.
India is one of the largest
importers of crude petroleum and is constantly under the dictation of brazen
price hike from the international suppliers from time to time. However, there’s
nothing India could do to stop the unmerciful price hike as there’s always
takers. On the other hand, India enjoys the luxury of very low electricity tariff
for import of electricity from Bhutan. Although there’s provision in the
Agreement to revise tariff every after five years, India seem less bothered
irrespective of cry from Bhutan. The tariff once fixed is not subject to any
adjustment such as inflation and depreciation of value of money. Therefore,
Bhutan is not only suffering with low tariff but also suffers from inflation from
year to year.
A simple analysis would show that
the annual turnover rate with respect to investment for Tala Hydropower Plant is
21.23% whereas it’s 55.55% in case of Dungsam Cement Plant.
Tala Hydroelectric power Plant, constructed at the cost of Nu. 41.26B with an
annual generation capacity of 4865 GWh electricity fetches annual gross revenue
of about Nu. 8.76B (at tariff rate of Nu. 1.8 per kWh). However, Dungsum Cement
Plant constructed at the cost of Nu. 10.8B is projected to earn annual gross
revenue of Nu. 6B(Kuensel 24 Dec. ’13).
Therefore, irrespective of what the
government says, it makes sense to simply believe that Bhutan’s electricity is
under the strict control of India. Despite all these realities, the choice of
government isn’t bad after all as something
is better than nothing. The effort of the govt. should be to break away
from iron grip of India diplomatically and in a holistic way.
Thank you, Terton. Finally someone's attempting to inform everyone in Bhutan of the actual costs and benefits of current hydro electricity policy. Hopefully someone in the Bhutanese media will pick up where you left off. Anyone with some knowlege of even basic economics can see that Bhutan's reaping far less benefits from hydroelectricity than she should be. For instance I remember reading in Kuensel that the provision for raising the tariff provides for a 10% tariff. Yep, that a 10% tariff raise after 5 years!! It doesn't take a rocket scientist to figure out that you're not really going to get ahead if inflation is running at atleast 5 - 10% a year , and you're only allowed to raise your prices 10% every five year. Add to that the fact you're getting paid with a crapshoot currency which tends to lose a third of it's value everytime the US Federal Reserve muses about not wanting to print any more extra dollars, you really start to wonder if it you wouldn't be better of keeping all the electricity for yourself.
ReplyDeleteHaving said all that, I think it's defintely a good idea to get much hydro electricity as we can. The government should also encouraging massive investments solar power without stupid restriction like 5 MW cap. In the winter times when the river's are dry, the sky's are usually crystal clear. Solar power is a natural compliment to Hydroelectricity.
We have a tradition of buttoning-up when it comes to issues of conflicting interest and compromise the situation seemingly to keep the 'close' neighbor happy. Silence is not a solution and instead to tending to the sensitivity, Bhutan must voiced and demand for a justifiable treatment especially in electricity cooperation.
DeleteOnce the contract has been signed, it's binding. There's not much Bhutan can do. However the government through it's state owned media should make some attempt inform all Bhutanese the true costs and benefits of all these hydro electricity deals.There are a lot of 'educated' Bhutanese, who marvel at how Indian aid has come with "no strings attached".
DeleteI discovered your blog by accident .. I have bookmarked it .. I will visit again .. lets hear you say more on the subject. Even HM said it on the National Day ... hydro-power is not going to solve our economic woes ... this is slowing becoming evident from that has been happening in that sector.
ReplyDeleteThank you. I know i am not a good writer but as a concerned citizen I am trying to voice which I feel is of national importance.
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