Electricity and gas production was expected by the government to account for 10.7 percent of GDP in 1991. Hydroelectric power has long been a very important aspect of Bhutan's economic development as a low-cost energy source supporting more capital-intensive industries, such as forestry, mining, and cement and calcium carbide production. Bhutan's steep mountains, deep gorges, and fast-flowing rivers create abundant hydroelectric potential, which the government began to develop in the early 1960s with India's assistance. In 1981 Bhutan generated 22 million kilowatt-hours of energy from hydroelectric sources. A major plant in southwest Bhutan--the 18,000-kilowatt Jaldhaka hydroelectric plant--furnished electricity locally and exported the balance to India's West Bengal. The major expansion of hydroelectric facilities started in 1975 on the Wang Chhu between Thimphu and Phuntsholing. Known as the Chhukha Hydel Project, it helped boost the nation's fledgling industrial development. The 336-megawatt Chhukha plant came on line in 1986 and was synchronized with the Indian grid that same year, and additional capacity became available in 1988. The Nu2.44 billion Chhukha project was 60 percent paid for by India and budgeted outside the normal development plan process. It was planned that Bhutan would sell at low cost all power to West Bengal that it did not consume itself. At the same cost, Bhutan also hoped to re-import some of that power through the Indian power grid into southern districts. The Chhukha project was important not only because it supplied electric power to western and southern districts but also because it provided a major source of income for the government. The project's gross annual income was projected at Nu380 million in 1989. In 1989 nearly 95 percent of Bhutan's government-installed power generation--a total of 355 megawatts-- was supplied by Chhukha, and a total of some 20 principal towns and 170 villages had been electrified. By 1990 Thimphu's commercial district had an underground cable system for its power supply.

Besides the Chhukha project, government installations included seven minihydroelectric plants, each averaging 7,350 kilowatts capacity twelve microhydroelectric plants, each averaging 340 kilowatts capacity and eight diesel-powered generation stations, each averaging 6,000 kilowatts capacity. Because domestic consumption was low (just over 16 megawatts, more than 80 percent of which was consumed by industry), ample power could be exported to India. The project not only cut domestic electricity costs in half, but also revenues from electricity sold to India were nearly equal to the total government revenue from all domestic sources. Smaller enterprises, such as the 1.5-megawatt Gyetsha Mini-Hydel, which was inaugurated in 1989, brought badly needed power to Bumthang and was expected to provide additional power to neighboring districts by 1993. Another major plant, a proposed 60- megawatt plant at Kurichu in eastern Bhutan, was included in the Sixth Development Plan (1987-92).

Other sources of energy included biogas, which was used in some districts for lighting an73b and cooking and was primarily generated from cow dung. Solar energy was used for a variety of purposes, including heating dwellings and greenhouses and lighting hospitals. Despite the potential solar energy that might be produced, Bhutan's mountainous terrain prevents maximum use. The same mountains are funnels for powerful winds, however, providing another viable renewable energy source. High-technology windmills were installed in Wangdiphodrang in 1987 to produce electricity to run irrigation pumps.

Still another source of fuel in the 1980s was wood. Although Bhutanese had greater access to electric power than they had had previously, traditional methods of cooking and heating required readily available fuel. In the mid-1980s, Bhutan produced a coal equivalent of 982,000 tons of fuelwood per year to meet domestic needs. Coal itself was available in reserve in some 1.3 million tons, but recovery was difficult and the quality was poor.

Data as of September 1991