The Hindu Business Line : Bhutan's revenues set for a boost

Chennai June 20 With the Prime Minister, Dr Manmohan Singh, dedicating Tala power from Bhutan to an energy-hungry nation, Bhutan's revenues are set to get a boost from Tala's generation.

That country's Finance Minister, Mr Lyonpo Wangdi Norbu, had acknowledged in the Royal Government's National Budget for the financial year 2006-07, presented in June last year, that Bhutan's GDP growth estimates hinged more on "the commissioning of the Tala project" than higher realisations "from the personal income taxes and sales taxes".

Domestic revenue

Mr Norbu has estimated domestic revenues at Ngultrum 10,122 million, an increase of more than a third from the original estimates of the 2005-06 financial year. "The farsighted policy of His Majesty the King in establishing large hydro-power projects is bringing us closer to economic self-reliance," read his Budget Speech.

Chhukha Hydro-power Corporation, which was commissioned in 1988, has proved to be "the backbone", contributing more than 35 per cent of Bhutan's revenues. With the Kurichhu and the Tala projects, the contributions of hydropower projects is expected to be much higher.

A section titled `future outlook' in Mr Norbu's Budget predicted, "Our economy is poised to take off on a more-sustainable path with the commissioning of the Tala Hydro-power Project."

Power from the Tala project is also expected to "open up opportunities to set up more power-intensive industries, which in turn will boost exports and address unemployment," in Bhutan.

Informative indicators

On the last page of Budget document, posted on www.mof.gov.bt, are the highly informative `comparative social and economic indicators' about power. Between 1985 and 2006, electricity generation rose from about 40 million units to more than 2,500 million units, of which about two-thirds are from Chhukha.

Electricity exports from the country are an amazing 71 per cent of power generated. This, despite more than 12-fold increase in the number of villages with electricity, doubling of towns with electricity, and about six times growth in the number of households with electricity, from less than 10,000 in 1985 to nearly 60,000 by 2006.

India has been receiving Tala power for almost a year now. "The first generating unit (170 MW) of Tala Project in Bhutan was commissioned on July 29, 2006 and the power has started flowing into India from August 2006," informed the Power Minister, Mr Sushilkumar Shinde, in a recent written reply to a question in Rajya Sabha.

"Allocation of Tala power has been done to the states of eastern region to improve their hydro-thermal mix and these states are to surrender equivalent thermal power (in lieu of allocation of Tala power) to the states of the northern region linked to the commissioning of various units of Tala project," he added. The states likely to be benefited from the above arrangement are West Bengal, Bihar, Jharkhand and Orissa in the eastern region and Haryana, Punjab, Rajasthan, Delhi, Uttar Pradesh and Jammu & Kashmir in the northern region, stated Mr Shinde.

India has agreed to a minimum import of 5,000 MW of electricity from Bhutan by the year 2020, and the umbrella agreement has a 60-year validity. However, the protocol to the agreement on purchase of power and tariff of the Tala project is valid for 35 years, according to which the first year tariff was be Rs 1.80 per unit. The agreement has a mechanism for the review of tariff.