India-Bhutan sign key power agreements

India and Bhutan on Thursday signed two significant agreements to strengthen cooperation in the power sector. Union Minister for Power and Housing & Urban Affairs Manohar Lal and other senior officers were present during the signing of agreements in Thimpu.  The two countries signed the tariff protocol for the 1,020 MW Punatsangchhu-II Hydroelectric Project, marking another milestone in their long-standing hydropower partnership. The project, jointly inaugurated by Prime Minister Narendra Modi and Bhutan’s King Jigme Khesar Namgyel Wangchuck in November 2025, has already begun exporting surplus power to India. Additionally, both sides agreed on a methodology for reactive energy accounting, a technical framework aimed at improving grid stability, efficiency and coordination in bilateral electricity trade.
Lal held talks with Bhutan Prime Minister Tshering Tobgay, where both sides reiterated their shared commitment to advancing collaboration in clean energy and sustainable development. He also met Bhutan’s Energy and Natural Resources Minister Gem Tshering to discuss ongoing hydropower projects and explore future opportunities in renewable energy and regional power trade. 
Expanding the scope of cooperation in the power sector, India and Bhutan have established an enhanced bilateral institutional framework mechanism. This mechanism will enable regular review and coordination of ongoing and future initiatives between the two countries to further strengthen collaboration. Key areas of cooperation include non-hydro energy, cross-border transmission, project financing, capacity building, and institutional partnerships.