New Delhi: India and Bhutan have signed two important agreements aimed at deepening bilateral cooperation in hydropower, electricity trade, and regional energy security, further reinforcing one of South Asia’s strongest strategic partnerships in the power sector.
The agreements were signed during the four-day official visit of Manohar Lal Khattar, Union Minister of Power and Housing & Urban Affairs, to Bhutan. The visit underlined the growing importance of clean energy collaboration between the two neighbouring countries.
Manohar Lal Meets Bhutan Prime Minister Tshering Tobgay
During the visit, Manohar Lal held discussions with Tshering Tobgay, Prime Minister of Bhutan, on expanding cooperation in clean energy, sustainable development, and long-term regional power connectivity.
Both sides reaffirmed their commitment to strengthening hydropower cooperation and identified energy partnership as a central pillar of India–Bhutan relations.
Officials said the meeting reflected the strong political trust and institutional cooperation that has long shaped bilateral ties.
Talks Focus on Hydropower, Renewable Energy and Regional Power Trade
The Union Minister also met Gem Tshering, Bhutan’s Minister for Energy and Natural Resources.
Discussions focused on:
- Progress of ongoing hydropower projects
- Renewable energy opportunities
- Regional electricity trade
- Future power transmission infrastructure
Both sides also agreed to strengthen long-term cooperation beyond conventional hydropower into emerging clean energy sectors.
Stronger Coordination Framework for Future Energy Projects
India and Bhutan agreed to establish a stronger institutional mechanism for regular coordination and monitoring of energy projects.
The new framework will focus on:
- Non-hydro renewable energy cooperation
- Cross-border transmission planning
- Project financing
- Capacity building
- Review of implementation progress
Officials said this structured system will help accelerate decision-making and improve project execution.
Tariff Protocol Signed for Punatsangchhu-II Project
One of the key agreements signed was the tariff protocol for the Punatsangchhu-II Hydroelectric Project.
This 1020 MW hydropower project is among the most important joint energy ventures between India and Bhutan.
The project was jointly inaugurated in November 2025, while export of surplus electricity to India began in September 2025.
The tariff agreement provides clarity on power pricing and supports long-term commercial viability of electricity exchange.
Agreement on Reactive Energy Accounting to Improve Grid Stability
The second major agreement covered a methodology for reactive energy accounting, aimed at improving technical efficiency in electricity exchange.
Officials said this mechanism will help:
- Improve grid stability
- Enhance transmission efficiency
- Reduce technical losses
- Ensure smoother cross-border power trade
This step is considered important as electricity exchange volumes continue to grow between the two countries.
Hydropower Remains Core of India-Bhutan Strategic Partnership
Hydropower cooperation has remained central to India–Bhutan relations for decades, contributing significantly to Bhutan’s economy and supporting India’s clean energy requirements.
The latest agreements are expected to create fresh opportunities for:
- Additional hydropower investments
- Regional clean energy integration
- Sustainable economic growth
Officals noted that future cooperation may also include broader renewable energy initiatives beyond hydropower.
Strategic Significance for Both Countries
The agreements come at a time when India is expanding regional clean energy partnerships while strengthening cross-border grid connectivity.
For Bhutan, hydropower exports remain a major source of national revenue, while India benefits from stable clean electricity imports.
The developments are expected to further strengthen bilateral trust and contribute to long-term regional energy security.
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