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India, Bhutan sign agreement on 600 MW Kholongchhu Hyrdroelectric Project pact

India and Bhutan have signed a concession agreement on the 600 MW Kholongchhu Hydroelectric Project (KHEL) for work to start on it. The hydroelectric project will be the first-ever Joint Venture project to be implemented in Bhutan. The joint venture partners of the project are India’s Satluj Jal Vidyut Nigam Limited(SJVNL) and Druk Green Power Corporation Limited (DGPC).

Speaking at the signing ceremony via video conference, Union Minister of External Affairs Dr. S Jaishankar said, “The commencement of the construction activities of the project will create economic and employment opportunities in Bhutan in this critical time.”

KHEL will be the first Joint Venture company to be implemented under an Inter-Governmental Agreement (IGA) signed in 2014.

“Cooperation in the development of the hydropower sector in Bhutan is the centerpiece of the mutually beneficial economic cooperation between Bhutan and India. Hydropower projects are of paramount importance for both our countries as they will serve to further integrate our economies, bring further prosperity, and enhance energy security for both the countries,” said Bhutan’s foreign minister Tandi Dorji.

Regarding debt financing, he called on the “JV partner from the Indian side would need to take the lead” and sought support and “intervention of the Government of India to ensure that the project secures access to the most viable financing at the earliest.”

Kholongchhu is expected to generate about 2568.88 million units annually.

Calling Kholongchhu a “continuation of our bilateral cooperation”, the Indian envoy to Bhutan, Ruchira Kamboj, highlighted previous such cooperation on hydro projects like Chukha, Kurichhu, Tala, and Mangdechhu, all of which she said, “stand as proud examples epitomising the core of this friendship and partnership for a greater good.”

She added, “With this seventh hydro project (Puna-I and Puna-II being the works in progress) we further the noble visions of both His Majesty and Prime Minister Modi as we develop even greater trust between our two countries.”

India recently completed the 720 MW Mangdechhu Hydro Electric Power Project and both sides are in the process of expediting the completion of other ongoing projects, including the1200MW Punatsangchhu-1 and the 1020MW Punatsangchhu-2.

During Prime Minister Narendra Modi’s visit to Bhutan in August 2019, he, along with his Bhutanese counterpart, had inaugurated the 720 MW Mangdechhu Hydroelectric Project.