Hydropower in Bhutan and Nepal: Why the difference?

Jeremy Berkoff

Published: September 2003

Bhutan and Nepal have followed differing hydropower development strategies. Bhutan has co-operated with India and power export earnings have helped fund a broadly successful economic, environmental and social programme. In contrast, Nepal turned to the World Bank and other donors to fund its power projects. When World Bank funding for Arun III was withdrawn in 1995, its programme was thrown into disarray and it remains to this day a net power importer. Nepal’s current economic, environmental and social malaise can in part be attributed to these past decisions in the power sector by the Government and World Bank.