Thukten Zangpo

The government and the government of India (GoI) has yet to come to a consensus on the construction of the 600MW Kholongchhu Hydroelectric Project Limited’s (KHEL) dam and powerhouse, according to Economic Affairs Minister Loknath Sharma.

He said that they could not discuss further because of the parliamentary session in India, although both the governments signed the tariff determination agreement. “It is the first joint venture model project and we need to have a clear idea about the project to avoid inconveniences later.”

Lyonpo Loknath Sharma was responding to the Trashiyangtse National Council (NC) member Karma Gyeltshen’s query on the slow progress of the KHEL in the NC session yesterday.

“No major work has started on the project. The local residents could not benefit through business and employment opportunities,” the NC member said.

Karma Gyeltshen asked about the government’s plans and strategies to expedite the project.

An Indian company, Jai Prakash Associates Limited, popularly known as Jaypee Group, was awarded the construction of a 95m dam and its complex with a Nu 9.72 billion (B) budget, and the construction of the powerhouse and its components with a Nu 6.21B budget on March 4 this year.

However, Bhutan bargained to have 20 percent of the powerhouse and dam construction done by Bhutanese contractors and 80 percent by the Jaypee Group.

A joint venture of a Mumbai-based private company, Valecha Engineering Private Ltd and Rigsar Construction got the work to construct 80 percent of the headrace tunnel worth Nu 4.36B, and 20 percent will be constructed by Construction Development Corporation Limited.

On the progress, Lyonpo said that Nu 4B was invested for the construction of roads, bridges, and residential areas that accounted for eight percent of the total project cost.

Lhuentse NC member Tempa Dorji said that in an earlier session, the NC pointed out the problem with the joint venture model and recommended not having the model in the future.

He also shared his concern that the cost escalation of the hydro-projects would have implications for increasing electricity tariffs.

Lyonpo said that the government would not increase the electricity tariff for heavy, medium, or domestic usage.

“If the electricity tariff is increased for industries, there would not be a competitive advantage,” he said, adding that the government has a way forward for the economy to start up with the project ideas that would be dependent on electricity. “The tariff is revised every three years.”

Meanwhile, KHEL is being financed through a debt-equity ratio of 70:30 with 50-50 equity holdings between the Druk Green Power Corporation and the Satluj Jal Vidyut Nigam Limited (SJVNL).

The project is expected to generate about 2.568B units annually. The sale of power will follow two routes: 30 percent of the net energy on the power exchange and the remaining 70 percent through a long-term purchase agreement.