The Bhutan We Think We Know

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FAQ

Why do Bhutanese households pay more for electricity than industry?

A Bhutanese household above the subsidised lifeline blocks pays Nu 2.66 per unit, while the 23 large industrial customers on the HV1 tariff pay Nu 1.60 — among the cheapest industrial electricity in the world — despite consuming about 88% of all domestic power. The official logic: serving 99.96% of customers who use only ~10% of the electricity means expensive rural wires (a genuine cost difference), while cheap bulk power was priced deliberately to attract industry, and lifeline blocks (100–200 free units) shield the poorest households. But the result is a price ladder that runs uphill — the smallest buyers subsidise the system that serves the largest — and the 2025–28 tariff revision proposed to keep that shape while more than doubling the household rate (Nu 2.66 toward an unsubsidised Nu 5.73) against a 75% rise for industry from its world-floor base.

Both halves of the answer are true at once, which is what makes it a genuine controversy rather than a scandal.

The cost half. Delivering power to 99.96% of customers — every village home, shop and monastery — means transformers up mountainsides for a handful of meters each, while a smelter takes bulk supply at 66 kV and bears its own substation costs. Cost-of-supply studies genuinely do put retail service above bulk industrial supply, and the lifeline blocks (100 free units in the lowlands, 200 in the highlands) shield the poorest consumers from the raw rate.

The policy half. HV1 was priced low on purpose — cheap power is Bhutan’s one industrial advantage — and it worked so well that 23 customers now consume ~88% of domestic electricity at terms almost no other country offers. Stack the two halves and the ladder still runs uphill: the household pays the top rate, industry and India’s grid pay the least, and each winter the state buys power back at Nu 4–6 to sell at those tariffs.

The price-ladder chart shows the whole inversion at a glance; the full anatomy — how each rung got there, and who carries the winter losses — is Who Gets the Cheap Power?

Primary sources