The Power Division of Bhutan is seeking a $10 million loan from the Asian Development Bank (ADB) for a rural electrification project.

The project involves setting up small hydropower and solar units to provide sustainable power for rural regions. Distribution lines at 33kV and 11kV would also be installed. The Power Division is also seeking a $600 000 advisory technical assistance loan.

One of Bhutan’s main assets is its hydropower reserves. Development and export of power offers the best route towards economic prosperity.

The country has already built a 336 MWe project at Chukka which generates about 40 per cent of the country’s exports. Power is exported to India and the latter’s recent agreement to pay more for its electricity has allowed the Bhutanese government to defer plans to introduce personal income tax this year.

The government plans to build at 1020 MWe plant at Tala to be commissioned in 2005. It has started studies for another 800 MWe station. While the country’s 700 000 people remain poor, with an average per capita gross domestic product of $550, economic performance has increased dramatically in recent years as a result of the income from hydropower.