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Funding for hydropower plants sorted, Narendra Modi packs bags for Bhutan

Sunday, 15 June 2014 - 7:12am IST | Agency: dna

Even while extending a hand of friendship to China, Prime Minister Narendra Modi choose Bhutan for his first foreign visit apparently to carry a message that Beijing's recent indulgence in this tiny kingdom has not gone unnoticed in India.

Modi, accompanied by external affairs minister Sushma Swaraj, national security advisor Ajit Doval and foreign secretary Sujata Singh, will reach Thimphu on Sunday for a two-day visit to demonstrate the "special token of friendship" for the country. The visit also marks the new government's priority to position India as a key player in South Asian affairs.

Key government advisors here said that Bhutan, an isolated mountainous idyl, fits well into Modi's scheme — pursue economic development with gross national happiness by preserving culture and traditions while embracing modernity. "Bhutan is one of our most important strategic partners. We can show our policy of good neighbourliness and a token of our friendship," foreign secretary Singh said at a media briefing. She also said various issues related to funding of hydroelectric projects that India is building for Bhutan have been resolved. She said a framework agreement on the joint venture model projects, totalling 2,120 MW, was signed in April 2014; the ministry of external affairs and the Planning Commission were on a warpath the last two years on the issue of funding of hydroelectric projects in Bhutan.

For the second phase of Phunatsangchu hydroelectric power project, the Commission had approved just Rs 160 crore against the MEA's demand of Rs 969.67 crore. For two other Bhutanese projects, the first phase of Phunatsangchu and Mangdechu power projects, the MEA projections of Rs 1,339 crore were reduced to Rs 978 crore. The Commission also halved the overall plan budget from the projected requirement of Rs 3,483.61 crore to just Rs 1,500 crore.

MEA officials said these issues have been sorted out and the Prime Minister's visit will give a filip to these projects. In the meanwhile, to reduce dependency on official funds, MEA has held meetings with EXIM Bank and some PSU banks to explore the possibility of raising funds from the capital market for the hydroelectric projects proposed under the joint venture model.

Both the governments had signed an umbrella agreement on cooperation in hydropower cooperation, under which India committed to import 10,000 MW power from Bhutan by 2020. Ten projects were identified to meet the target. Of the 10, four projects — Chamkharchu-I (670MW), Bunaha (180MW), Kholongchhu (486 MW) and Wangchhu (600 MW) — will be under the joint venture mode.

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