For hydro watchers, the November 2014 visit of the Indian President Pranabh Mukherjee, confirmed long standing doubts about the 10,000 MW by 2020 deal between India and Bhutan announced in 2008.
Before the ink could even dry on the paper for this 2008 broad 10,000 MW by 2020 agreement the Indian Power ministry had already raised financing concerns by 2008-09.
The Indian President confirmed India’s reluctance by announcing that only 6,476 MW of existing and new power projects would be possible by 2022.
This meant that as per the updated list minus the existing 1020 MW Tala, 336 MW Chukha and 70 MW Kurichu only 5,050 MW of new projects would be possible by 2022.
Not in this updtaed list was the all important 2560 MW Sunkosh project and the and the 2,640 MW Kuri Gongri project.
In-fact, three months before the visit of the Indian President the Detailed Project Report for the Kuri Gongri project was put on hold on September 2014 signaling the freezing of this project too.
Since 2014 the government has been engaged in hectic and furious diplomatic activity to restore the two frozen mega-projects with the ground level follow up and negotiations being done by the Ministry of Foreign Affairs and the Ministry of Economic Affairs.
At the policy level Lyonchhen Dasho Tshering Tobgay in his meetings with the Indian Prime Minister, ministers and other leaders have continuously raised the need to implement the Sunkosh project.
As per past press releases hydropower has been discussed during audiences given by His Majesty The King to senior Indian leaders.
A big breakthrough for the Sunkosh project has been an in-principal commitment given by the Indian government in 2017 and again in 2018 to implement it in the Inter Governmental model or IG model where Bhutan has full ownership.
This is big jump from the shelving of Sunkosh in 2014.
Earlier in December 2015 the Joint Secretary North of the Ministry of External Affairs in a visit to Bhutan made it clear that the Government of India cannot fund the entire Sunkosh and Kuri Gongri projects given the size of the investments required.
Estimates showed Sunkosh would require above Nu 200 bn while Kuri Gongri would require above Nu 150 bn.
He laid out the option of going the Joint Venture route whereby an Indian public company shares 50 percent ownership of the project for 30 years among others.
In in April 2016 the Joint Secretary Hydro Archana Agarwal of the Ministry of Power also said that the estimated cost for the hydropower projects are enormous and GoI is not in a position to inject the amount which is why other options like Joint Venture among others were suggested.
However, the government stuck to its position reminding the Indian side that both Sunkosh and Kuri Gongri are already identified as IG projects and so a JV cannot be considered. The government also reminded the Indian government of the importance of both these project to Bhutan.
In 2016 the 2,640 MW Kuri Gongri project got a lease of life as the DPR which had been frozen since September 2014 could continue as India released Nu 120 mn in funds for a DPR likely to cost Nu 400 mn.
It is also noteworthy that a press release of His Majesty The King inaugurating the 77 km Gyelpozhing-Nganglam highway on 10th May 2018 says that the highway will also connect the upcoming 2640 MW Kuri-Gongri hydropower project.
An important development in 2017 was that India’s Central Electricity Authority (CEA), approved the DPR of the Sunkosh project paving open the way for both sides to negotiate the project.
The latest discussion on the Sunkosh project is that while the Indian side has agreed to the IG model they would like to ‘tweak it’ to allow for flexibility in the financing of the project.
Given India’s funding concerns for Sunkosh it has suggested the idea of exploring the option of seeking funds from international financial institutions.
The Bhutanese side is still looking at this though for any such funding modality Bhutan would look at India to be the guarantor for the loans.
A Bhutanese official in the know also said that their understanding is that apart from the 70 percent loan, the 30 percent grant would still be put up by the Indian government for Sunkosh.
For the Bhutanese government the 50th year of celebrating diplomatic ties between Bhutan and India has come as an opportune moment, as the Bhutanese side has used this occasion to push for the implementation of the Sunkosh project as the highlight of the celebrations and relations.
This was why Bhutan’s Foreign Ministry rushed to announce signing an agreement on Sunkosh as one of the key highlights of the golden jubilee celebrations.
During the celebration of the golden jubilee of laying the foundation stone of India house Lyonchhen in his speech at India house said that the time has come to build two more monuments to Indo-Bhutan friendship. One is the Sunkosh project for which he said works are at an advanced stage to sign an agreement and the other is the Cancer Hospital.
After the Doklam episode when the then Indian Foreign Secretary S. Jaishankar visited Bhutan in October 2017, the importance of the Sunkosh project was stressed by the Bhutanese side.
In February 2018, the visit of the Power Secretary Ajay Kumar Bhalla also saw discussions on the project. This is apart from the leader to leader discussions in various fora and other diplomatic communications between the two nations.
One may question why Bhutan is pursuing the Sunkosh project and for that matter even the Kuri Gongri project at a time when India is power surplus on paper and tariff rates for power is falling in the region.
However, the above is also why it is important for Bhutan to graduate from the the normal run of the river projects constructed so far to the reservoir projects.
Reservoir projects which store water can easily command higher tariff rates as power can be generated at the time of day when it is most in demand. It is known as peaking power rates.
Also, Bhutan’s industrial base and capacity is limited to the power that can be produced in the lean winter months when power has to also be imported from India.
The reservoir projects would add hugely to increased winter power generation and supply steady and reliable power to Bhutanese industries all through the year.
As India and the rest of the world pursue renewable energy like solar and wind due to climate change and air pollution, hydro becomes an important part of this renewable energy mix. For example, solar power can be had only during the day while wind power is limited to winds but reservoir hydro projects can easily come in to fill in the gap when the above two cannot generate renewable power.
Bhutan has also indicated to India the importance of Sunkosh not only from the point of hydropower but also in flood control.