Industry, Mining, Energy, and Commerce

Bhutan Table of Contents


Only 1 percent or less of the work force was involved in industry and construction in the late 1980s, and industrial production and construction represented only 14.2 percent of GDP projected for 1991. Handicrafts, cement, food processing, wood milling, and distilling were the major industries. In the late 1980s, there about 400 small-scale cottage and industrial units. There also were two cement plants under the Penden Cement Authority; a joint venture (the government-sponsored Tashi Commercial Corporation in conjunction with the World Bank, Norway, and Kuwait), a Bhutan Carbide and Chemicals calcium carbide plant (near Phuntsholing), and factories for processing fruit, for manufacturing paper pulp, wood veneers, and particle board (Gedu Wood Manufacturing Corporation and Bhutan Board Products), and for producing resin and turpentine. Additionally, there were three distilleries and a salt iodization plant. Other small industrial enterprises manufactured such consumer goods as soap, confectionaries, and furniture. Most of the larger industries, established since Bhutan's economic modernization began in the 1960s, were themselves modern and used a considerable amount of labor-saving technology. The largest industries employed no more than sixty or seventy workers. Many of the newly developing industries began making public stock offerings in the late 1980s.


The mining and quarrying industry was projected to produce 1.5 percent of GDP in 1991. Limestone--used in cement production--and clay were the major minerals being extracted in the mid-1980s. Mineral production also has included marble, dolomite, graphite, and slate. In addition, deposits of copper, gypsum, lead, tin, tungsten, zinc, coal, beryl, mica, pyrites, tufa, and talc have been found, primarily through an exploration program operated initially by the Geological Survey of India and, starting in 1982, in cooperation with the Geological Survey of Bhutan. Although not being exploited as much as other minerals, Bhutan's slate deposits have been described by experts as some of the best in the world. Bhutan's high-quality limestone deposits and energy resources were expected to take on increasing importance in the 1990s because of the contributions they could make to the ferro-silicon industry, which the government hoped to invest in through Bhutan Carbide and Chemicals.


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 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.


Commercial services were projected to generate 7.4 percent of GDP in 1991. Much of Bhutan's commerce revolved around touristoriented hotels and restaurants, and wholesale and retail trade made up the balance. The Bhutan Chamber of Commerce and Industry served as a formal conduit between government and private-sector businesses. The chamber was established with government sanction and leadership in 1980, but it made a slow start. In 1984 the first meeting was held between chamber members and heads of government departments, and the Trade Information Centre was established as a unit of the Department of Trade and Commerce to provide trade and commercial information to both the public and private sectors. Despite these initiatives, the Bhutan Chamber of Commerce and Industry had to be reorganized in 1987; the intent was that the chamber would play a "vital role" in coordinating activities in the government and private sectors and promoting socioeconomic development. The Druk Gyalpo himself criticized the chamber in 1988 for its "extremely poor and disappointing performance" and urged it to take on a greater role in national development and to help build a strong and dynamic economy. Despite these initiatives, the Bhutan Chamber of Commerce and Industry had only forty members in 1989.

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Source: U.S. Library of Congress