New Delhi: India and Bhutan on Thursday signed the Protocol to the Agreement on the Punatsangchhu-II Hydroelectric Project (PHEP-II) export tariff and agreed on a methodology for accounting of reactive power exchange, marking a key step in advancing bilateral electricity trade and grid integration. The agreements were concluded during the official visit of Power Minister Manohar Lal Khattar to Bhutan.
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The Ministry of Power said the visit underscores the “shared commitment of both the countries to further strengthen their exemplary partnership in the hydropower sector and expand cooperation in the field of energy.”
The protocol relates to the 1,020 MW Punatsangchhu-II hydropower project, which is already operational and exporting power to India. “The Protocol to the Agreement between the Government of the Republic of India and the Royal Government of Bhutan was signed for the Punatsangchhu-II Hydroelectric Project Export Tariff,” a joint statement issued by the Embassy of India in Bhutan said.
The project was jointly inaugurated by Prime Minister Narendra Modi and Bhutan’s King Jigme Khesar Namgyel Wangchuck in November 2025 and has been supplying surplus electricity to India since September 2025. The protocol formalises tariff-related arrangements governing this cross-border power flow.
The two sides also agreed on a structured methodology to account for reactive power exchange between their grids — a technical but critical element in cross-border electricity trade.
“GoI and RGoB also signed the methodology for accounting of the reactive power exchange between India and Bhutan that will be effective from 1 May 2026,” the joint statement said.
The framework is expected to “contribute to enhancing grid stability, ensure fair and transparent accounting of power flows, and further strengthen cross-border interconnections between the two countries.”
In practical terms, this means both sides now have a mutually agreed system to measure, price and settle reactive power flows, which are essential for voltage control and grid stability but often go unaccounted or inconsistently priced.
As part of the visit, the minister is scheduled to attend the first concrete pour ceremony at the 1,200 MW Punatsangchhu-I project on April 10. “This marks a momentous occasion for the people of both the nations to witness the commencement of dam works at the 1200 MW Punatsangchhu-I Hydroelectric Project,” the statement said.
The visit also includes meetings with Bhutanese leadership, including Prime Minister Tshering Tobgay and Energy Minister Gem Tshering.
During the visit, the minister called on Bhutan’s King Jigme Khesar Namgyel Wangchuck and conveyed that India remains committed to supporting Bhutan’s hydropower-led development.
The minister also apprised Bhutan's King of his constructive discussions with Bhutanese leadership, including the Prime Minister and the Minister of Energy & Natural Resources, which focused on further expanding cooperation in the energy sector.
Emphasising that energy cooperation continues to be a key pillar of India–Bhutan relations, the Union Minister underlined its role as a tangible execution of the mutually beneficial partnership between the two countries.
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India-Bhutan energy cooperation is centred on hydropower development and electricity exports from Bhutan to India, supported by long-term agreements, financing arrangements and transmission connectivity. “The India-Bhutan partnership is built on long-standing energy cooperation, deep understanding and friendship across all economic and developmental areas of cooperation,” the joint statement said.
The Ministry of Power noted that the visit will further expand collaboration across power generation, cross-border trade, transmission systems, technical cooperation and capacity building.