Bhutan inks huge renewable energy deal with Indian firm

Bhutan has signed a deal with India's Reliance Group to build 1,270 megawatts' worth of renewable electricity projects in the Himalayan nation as it seeks to become an energy-exporting powerhouse.

Tiny and landlocked, with a population of less than 800,000, Bhutan is wedged between China and India and is known for its policy of prioritising "Gross National Happiness" over growth.

That policy, however, has not helped the government deal with widespread unemployment, which has spurred thousands of young people to leave the country.

The power project is part of broader efforts to reverse that trend by soliciting foreign investment to drive economic growth, including through a much-hyped special economic zone known as the "Gelephu Mindfulness City".

"Bhutan is rich in energy resources, and India's demand makes this partnership even more crucial," Ujjwal Deep Dahal, chief executive of Bhutan's state-owned Druk Holding and Investments (DHI), said in a press release late Wednesday.

The project commits Reliance Group, helmed by Indian billionaire Anil Ambani, to build in conjunction with DHI 770 megawatts of hydropower and 500 megawatts of solar projects in Bhutan.

If realised, the projects would be equal to just over half of Bhutan's current installed capacity of 2,444 megawatts, more than 99 percent of which is hydropower.

The agreement did not specify the cost of the investment or when the hydro project, known as Chamkharchhu-1, would be completed. It aims to have the solar plant up and running in the next two years.