The tariff for the Mangdechhu Hydropower Project Authority (MPHA) has been agreed at Nu 4.12 per unit, the prime minister said.
During the prime minister’s recent visit to India, the Bhutanese government has proposed a tariff of Nu 4.27, while the Indian government offered to pay Nu 3.9 per unit.
The two sides then negotiated and agreed at Nu 4.12 per unit.
This is the highest power tariff ever. The current tariff for Tala and Chhukha projects is Nu 2.12 and Nu 2.55 respectively.
Meanwhile, the loan period for the project has been extended by two years from 15 to 17 years.
“The Bhutanese side further requested that along with the loan period extension, the additional interest liability be considered. So, the Indian government agreed to provide and incorporate future tariff revisions,” Finance Secreatry Nim Dorji said.
“Presently, as per the bilateral agreement, after every five years during the loan period, it’s 10 per cent revision and after the loan period, it is five-year revision. Therefore, taking into account the benefits for Bhutan, the government of India has agreed to provide another 10 per cent increase in the 16th year,” the finance secretary added.
This means for the first 17 years, Bhutan will receive ten per cent increase in tariff and five per cent increase in the 21st year. The MPHA power export period is 35 years.
With the loan period extension, the debt servicing obligation of the country will be reduced by Nu 390 M.
Bhutan will earn Nu 5.5bn in revenue annually from MHPA after deducting the operational cost and servicing obligations.
The MHPA was financed by the Indian government with 70 per cent loan and 30 per cent grant.
