Sector Assistance Program Evaluation for the Bhutan Energy Sector
ADB's support program for Bhutan's energy sector during 1992-2009 focused on reforms to improve the sector's financial performance, providing financial assistance to expand the country's distribution network to increase access to electricity in rural communities, and helping mobilize hydropower investments through public-private partnerships.
ADB approved loans totaling $135.2 million to develop Bhutan's energy sector over the review period. Overall, ADB rated support as successful.
The study found that the long-term continuity and predictability of ADB financing for rural electrification in Bhutan was highly effective: "This has enabled the government to plan ahead, as there was certainty over the availability of financing." ADB's role as anchor financier for the rural electrification program was also a source of assurance for bilateral development partners to complement ADB financing and share the project preparation and implementation arrangements for larger rural electrification projects in Bhutan.
The study recommends that ADB support the grid-connected renewable energy projects, including small hydro-power projects below 25 megawatts, increase efforts to develop follow-up public-private partnership transactions at the Dagachhu hydropower project, and increase the focus on the environmental sustainability of large hydropower development in Bhutan.