Bhutan can no longer rely on hydropower exports as a major source of foreign currency earnings. The finance ministry projects that the country’s net energy exports will decrease, potentially falling to around Nu 950 M by 2026. The ministry’s latest quarterly macroeconomic situation report raises concerns about how Bhutan can effectively meet its rising energy needs while increasing local energy production.
As of the end of June this year, the hydropower sector is expected to earn about Nu 30bn, with 34 per cent of this coming from domestic sales.
With both exports and domestic sales anticipated to rise, the new estimate reflects an increase of over Nu 2bn from the third quarter projections.
However, while sales from hydropower are set to increase due to higher production, domestic electricity demand is also growing.
The report states that although revenue may rise initially, it is projected to be lower in the medium term compared to earlier estimates, as more energy will be used domestically, limiting the amount available for export.
Bhutan imports electricity during the winter months, which is considered a lean season, and the import cost is expected to exceed eight billion ngultrum this year, representing a significant 200 per cent increase compared to last year.
Even with the commissioning of the Punatsangchhu-II hydroelectric project, electricity imports during the lean season are expected to rise.
Earlier this week, the management of the Punatsangchhu-II Hydroelectric Project announced that the commissioning of PHPA-II is now scheduled for the second quarter of next year due to a water seepage issue.
Samten Dolkar
Edited by Sherub Dorji
