Effectiveness of hydropower development finance: evidence from Bhutan and Nepal

Bhutan benefits from surplus power generation and associated export revenues, whereas Nepal suffers from power shortages and import deficits. They have contrasting hydropower development, taking different approaches and relying on different sources of development finance in hydropower projects. This study analyzed effective financing approaches for feasible hydropower projects under geopolitical constraints. The lesson learned from their comparison is strategic prioritization to select and consolidate international funds. Bhutan has attracted external finance to large projects for power export. However, Nepal failed to plan and use external funds from donors and private investors, resulting in small projects for only domestic consumption.

Automated summary

Bhutan benefits from surplus power generation and export revenues, while Nepal suffers from power shortages and import deficits. Strategic prioritization and effective financing approaches are crucial for successful hydropower projects under geopolitical constraints. Bhutan attracts external finance for large projects, while Nepal struggles with utilizing external funds for small-scale projects.