“… enlightened economic policies ensured that benefits from valuable national resources such as hydropower was neither captured by narrow economic elite nor influential foreign investors. Instead, it was judiciously developed by the state to strengthen our economy and benefit the nation and the people at large.”
His Majesty The King reminded graduates attending the 14th convocation of the Royal University of Bhutan on May 14 last year. Before that, the royal message on the National Day in 2013 highlighted how hydropower was considered as our nation’s most precious resource that belongs to the people of Bhutan.
Given that hydropower was the only sector that ensured unaffected income to the government during the current pandemic, the royal advice is becoming more critical and relevant. The revenue from the export of electricity, which this year was favoured by good hydrology, was the most reliable source, as the pandemic disrupted the economy and source of government revenue.
The government is in the process of reviewing the national policy as well as legislation on hydropower development to align them to national priorities. The new policy emphasises on 100 percent government ownership, inter-governmental bilateral arrangement with partner countries, and sub-regional and regional arrangements with full ownership resting with the government of Bhutan.
This is a timely intervention to ensure that people of Bhutan benefit from natural resources. For this the Bhutan Electricity Act, 2001, needs to be amended to mandate full ownership of any hydropower developmental activities with the government. There is immense national interest in this development. Our parliamentarians will have the wisdom to ensure that we need legislation that would regulate the properties of the state like mineral resources, rivers, lakes and forests as enshrined in the Constitution.
Many countries invest in hydropower to meet their domestic energy demand. We invest to earn revenue. It is still the highest revenue-generating sector. All the projects executed until now with 100 percent government ownership brings in 100 percent revenue to the government.
There had been interest from big companies to invest in hydropower with the existing policy developed in 2008 to accelerate hydropower generation goal of 10,000MW by 2020 and the electricity Act allowing private sector participation and foreign investments. If private individuals invest in hydropower, the revenue would be shared. Still a reliable source of revenue for national development, government ownership is the best bet.
Our private sector has developed, but does not have the capacity to take up hydropower plants without foreign investment like in any mega projects. The government would be losing out revenues while fulfilling the obligations like tax holidays and other concessions because of the long gestation period of the investment.
The private sector should not be left out. As indicated, the policy should ensure our private sector is included in the construction, supply of raw materials and automation parts. Tangsibji hydropower project, where Bhutanese contractors are involved, could test the capability.