HEPs in Bhutan: Centre apprehensive about private sector participation

The government is seemingly hesitant about allowing private sector participation in the lucrative hydel sector of Bhutan. While Indian public sector undertakings have committed to execute 10,000 MW of projects in the neighboring country, India needs to move fast on the remaining 10,000 MW of potential, if it wants to prevent other countries from making a move. 

However, this is easier said than done, given the immense resources needed to execute such projects, in the background of the stretched finances of the PSUs.Encouraging the entry of private players is the next logical step in such a scenario. However, the government fears that participation of the more efficient private sector would lead to a crowding out of the public companies. It is also felt that private generation projects would imply Indian consumers facing market prices for power imported from across the border.In our opinion, the government need not be so apprehensive. The Indian private sector has very limited experience in hydel projects. In addition, the expertise of public companies, such as NHPC, THDC, etc., in carrying out the requisite feasibility studies and preparation of Detailed Project Reports is unmatched. Thus, PSUs will remain an integral part of projects in the kingdom for years to come.Another option before the government is to hive out a separate company, which can independently raise the massive amounts of funds needed, for the execution of projects in Bhutan. However, such a move entails complications that would need careful planning and a lot of time to work out.