Lighting Up the Countryside in Bhutan

Article | 16 November 2010

A broad approach to Bhutan's complex power challenges has kept people healthier, allowed children to learn better, and fueled a nascent tech boom.

Thimphu, Bhutan- Nachu, a proud former military man who lives in a small village outside Bhutan's capital of Thimphu, built his home when there was nothing but a mule track leading to an empty expanse of raw land. The softspoken 82-year-old has since seen the road come in; electricity and clean, piped water followed.

The Future is Bright

When he built his home years ago, Nachu used candles and kerosene lamps for light, and a woodburning stove for cooking. The soot and smoke that filled the home kept his family coughing and the house dirty.

The kerosene lamps and wood-burning stove are gone now, replaced by light bulbs and a rice cooker. A television brings the latest news and entertainment from around the world. His five children are grown, but two grandchildren live with him; he said they benefit the most from electricity.

"With electricity, the children can study at night," Nachu said. "This gives them a better chance to get a proper education. This improves their opportunity in life. We couldn't go back to the darkness, to the time before we had electricity."

Electricity for All

Nachu and his family benefited from the deep partnership between the government and ADB in Bhutan's energy sector. ADB's assistance to Bhutan's energy sector has included five loans totaling $132 million. ADB has supported projects that have helped install or upgrade 1,260 kilometers (km) of transmission lines and 1,770 km of distribution lines, bringing electricity to nearly 17,000 households.

Bharat Tamong Yonzen, the managing director of the Bhutan Power Corporation (BPC), which is mandated to bring electricity to the nation, said that ADB was a driving force from day one in the country's "electricity for all" initiative. "ADB has been fundamental in providing assistance to the electrification program of Bhutan," noted Yonzen. "In that sense, nearly everyone in Bhutan is a beneficiary of ADB.

They have touched the lives of everyone in the country who uses electricity." Bhutan and ADB have partnered in an ambitious program to boost both electricity for export, which earns valuable revenue for the country, and power for its people with an aggressive rural electrification strategy.

The government has set a goal of 100% electricity coverage by 2013, and as of 2010, the program remains on schedule. The government also reached an agreement with India - which purchases much of the electricity Bhutan generates - to increase generating capacity to 10,000 megawatts (MW) by 2020. This will substantially increase its current power-generating capacity of 1,500 MW.

Energy that Heals

The goal of 100% electricity coverage is driven largely by the ADB-supported Rural Electrification and Network Expansion Project, which began in 2004. The project brings electricity to more than 8,000 new consumers, including poor households, schools, and hospitals.

The project included the installation of solar panels in some remote areas. These helped reduce fuel wood consumption by about 80%, according to an ADB report. The project has also initiated the replacement of kerosene lamps with electric lamps, helping improve air quality in homes, and has enabled the use of electrical appliances, such as televisions, which provide better access to information.

The ADB found that pressure on forests decreased in areas served by the electrification project, and that it promoted gender equality and education for the poor. Greater use of electrical appliances, such as rice cookers, has enabled women to save time and engage in income-earning activities, such as weaving.

The Power to Power

A key aspect of broadening the distribution of electricity in the country has been to help Bhutan's national power company operate more efficiently. The ADB-supported Capacity Building for the Bhutan Electricity Authority Project has increased electrification efforts nationwide in a sustainable manner.

The project helped BPC completely overhaul its operations. Upon completion, the corporation generated net profits, including a 4.6% return on fixed assets that followed losses since 2002.

The ADB-supported Electrification Act of 2001 transformed the BPC from a government agency into a corporation, removing constraints on decision making and access to resources.

"As a corporation, we can focus on our core business: the distribution and transmission of electricity," said Yonzen. ADB-supported restructuring and capacity building also introduced a corporate culture of efficiency and modern practices that is now benefiting consumers. Requests for new energy connections that once required weeks of waiting are now fulfilled in 3 days or less.

BPC was also the first Bhutanese corporation to implement a performance-based management system, a merit-based bonus system, and other industry standards. Today, other corporations ask for BPC's advice on how to implement these policies.

"This capacity that ADB helped us build is now being passed on by us to other corporations in Bhutan," said Yonzen, who added that BPC has been able to stop hiring expensive foreign consultants because its own staff can complete the tasks under its mandate. "The money that was used to hire consultants is now going to electrifying Bhutanese homes."

The results of the corporation's latest customer satisfaction survey indicated an impressive positive response (88.5%), a satisfaction rate comparable to that found in Singapore. Power interruptions also declined to 6.5% in 2008, a figure that compares favorably with those of other countries in the region.

Tech Boom

This transformation of electricity service has created a growth industry for Tashimo, a 33-yearold electronics shop owner. Because of the increased reliability of electricity in Thimphu, her business is brisk.

"Before, if there was a problem with the electricity service, BPC could take weeks to fix it," she said. "Power was on only part of the day and there were frequent brownouts. People didn't want to buy electronics when electric service was so unreliable." "Now, if there is a problem with electricity, BPC responds immediately to fix it, and we have reliable, 24-hour power," she said. "Everyone wants electronics now. Everyone wants a TV and a DVD player. These are very popular items now."