By Tshering Palden

The government has violated the Bhutan Sustainable Hydropower Development Policy (BSHDP) 2008 by not giving the agriculture ministry the one percent electricity royalty in cash for integrated water resource management.

This is among the numerous non-compliance and discrepancies in the hydropower development policy and programs, the National Council’s review found.

“Government must ensure compliance to fulfilling policy provision of deposit of one percent royalty in cash annually to the agriculture ministry for conservation of integrated water resource management,” the ad-hoc committee’s chairperson and Gasa Councillor Sangay Khandu said.

The committee chairperson said there are instances where the Land Act 2007 has been disregarded and provisions disrespected by different implementing agencies.

The Act and its provisions concerning acquisition of private lands for public and national purposes must be followed strictly.

“Laws once passed must be respected and if provisions were found unsuitable, it must be amended but cannot be ignored,” he said.

The Property Assessment and Valuation Agency rates have not been revised on three yearly basis and have thus brought about unfairness in compensation to the landowners.

There is a mismatch in the treatment of royalty energy from the projects, the review found.

The BSHDP requires royalty energy of 12 percent for the first 12 years and 18 percent for the remaining of the concession period while the economic development policy 2010 requires an average of 15 percent throughout the concession period.

Compliance to national employment policies and laws appear weak and needs strengthening. This has become crucial given the dire situation of unemployment in the country and youth unemployment in particular, the committee stated.

“Section14.1 under exclusion of BSHDP 2008 needs to be re-aligned recognising that anything outside of a clear policy or law will need the support of Parliament before acted upon,” the report states.

Procedural and criterion framework for the use of rehabilitation, resettlement and local development plan fund requires to be drawn up. It needs to incorporate consultative procedure with the local development committee, as the policy requires.

“Institutional responsibility for social impact assessment is found lacking unlike for environment where NEC has been mandated,” the committee report stated.

The Gross National Happiness Commission has to align local development plan with hydropower development plans.

“For instance, communities in Trongsa nearby Mangdechu project could have met all the vegetable requirements of the project staff had the local government planned in advance,” Pemagatshel Councillor Jigme Rinzin said.

“Without aligning hydropower into national development plans, the opportunity to reap the full potential of hydropower development will be lost,” he said.

Detailed Project Report (DPR)

The committee called for proper costing in the DPRs by taking into account time gap between its preparation and actual commencement of the project by providing an updated DPR cost on the project commencement date.

The local consulting firms could be given preference in the preparation of DPRs, it recommended.

“Institutions under the Royal University of Bhutan now have the capacity to do assessments for the DPRs,” Trongsa’s Councillor Tharchen said.

Comprehensive DPR preparation and techno-economic vetting needs to be carried out by third party before decision to implement is taken including major deviations.

The projects earmark less than 0.42 percent of the total estimated project cost and about two years for carrying prefeasibility study and DPRs while even in developed countries like Japan, it spends up to five percent of the total project cost in these studies.

“The amount of time and resources spent in carrying out these activities have a direct bearing on the geological confirmation,” Jigme Rinzin said.

“That’s why in our country the projects come across geological surprises,” Tharchen said. “Therefore, we also need to fix accountability on those who develop the DPRs.”

Despite three decades of hydropower development, the country still does not have national experts. Thus, the committee recommended strengthening Druk Green Power Corporation to build local capacity in developing future hydropower projects.

“We also observed that the cost escalation in projects implemented by Bhutanese remains under Nu 100 million, while others have all gone beyond that,” Jigme Rinzin said.

“Cost escalation is one of the biggest concerns for Bhutanese as the projects are funded through debt and the loss of revenue,” he said.

The Council will continue to deliberate the report on Monday.