Many Nepalis would be shocked to hear that Bhutan will face load-shedding from the coming winter. The citizens of Nepal have, after all, been told for decades that Bhutan has done a great job of developing hydroelectricity, that it has earned significant money by exporting electricity to India, and thus it has been able to achieve the highest per capita income in Southasia. Conversely, Nepal has been ridiculed for wallowing in 'empty nationalism' and stirring 'needless' controversies over the Mahakali Treaty of 1996 (for water sharing on the Mahakali River) as well as hydropower projects such as the West Seti, both of which involve export of electricity to India.
The socialist and communist leaders of Nepal, seemingly suffering from a sense of moral and intellectual inferiority, have been unable to give a fitting reply from the standpoint of their ideologies. Such a reply would need to point out that it is questionable whether a development path that requires relinquishing defence and foreign policy to a foreign power is beneficial for the country in the long term. Party intellectuals advising politicians and political parties who only see revenue inflow and ignore vital diplomatic and strategic issues are in truth unwittingly pleading to be colonised. Nepal's chronic load-shedding problem should then come as no surprise when these 'Brahmins behind the throne' fail to see the political economy hidden behind the load-shedding that is imminent in Bhutan.
At first glance, Bhutan certainly appears to have achieved better hydropower development than its Himalayan neighbour. Three times smaller in landmass and with a population one-fiftieth of Nepal's, the current generating capacity of Bhutan (at 1488 megawatts) is twice that of Nepal. The Punatsangchhu-I hydro plant, under construction with a 60 percent grant and 40 percent soft loan from India, will add another 1020 MW by 2016. Such cheap development capital means that Bhutanese consumers pay a mere INR 1.30 per unit of electricity, allowing them to cook food and heat homes with electricity. Currently, about 70 percent of the 123,000 households in Bhutan have access to electricity, and by 2013 the entire country is expected to be electrified.
In comparison to Nepal, these would be considered significant achievements. And so, one may well ask, if these are the facts, why is the Bhutanese model wrong? And, incidentally, how is it that the country is on the threshold of load-shedding? Though Bhutan has twice the electricity-generation capacity of Nepal, around 80 percent of its electricity is exported to India, leaving only about 300 MW for consumption in Bhutan. Of this, only 80 MW is for domestic use, while the rest goes to southern Bhutan to be consumed by various Indian-owned industries, such as cement factories, lured here by the availability of cheap electricity. Subsidised electricity has led to booming demand, which grew by 19 percent from 2007 to 2008, increasing a further 27 percent in 2009 and 54 percent in 2010. As a result, Bhutan will be compelled to reduce its consumption by around 25 MW via load-shedding this coming dry season, worsening as demand continues to escalate till 2016, when Punatsangchhu-I comes online.