India-Bhutan Hydropower Cooperation - Current Situation

Although India and Bhutan are good friends, there are many views on India’s participation in the hydropower sector.

Special bilateral relations between India and Bhutan are very close and continue to grow in many or almost all areas of cooperation including hydropower generation. Since the beginning of first five-year plan in the Himalayan state’s, in the early 1960s, the nations south of Bhutan have first made significant contributions to power generation projects since the ‘Jaldhaka’ agreement in 1961. This cooperation will also lead to many important activities. Chukha Hydroelectric Project of 336 Mega Watt (MG) capacity in 1978 was the first mega project in Bhutan to be fully financed by the Government of India (GOI) with 60 percent grant and 40 percent loan at 5 percent interest rate for a period of 15 years. Since then, the hydropower generation agreement (July 2006) has further strengthened the mutual trust between the two countries, setting the stage for other projects.