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Thukten Zangpo

The joint sitting of Parliament yesterday endorsed Public Accounts Committee’s (PAC) recommendation to resolve irregularities of Punatsangchhu-I Hydroelectric Project Authority (PHPA-I).

The PAC recommended that the Royal Audit Authority (RAA) and PHPA-I authority must come to a consensus to resolve the remaining irregularities as some of the observations involve policy issues and have seen carrying on for more than 5 years.

The majority of the MPs supported the recommendation.

PAC also recommended that the geologic conditions of the right bank dam area are seen as force majeure conditions of nature and irregularities pertaining to dam site development may be dropped if the barrage option gets through.



Out of 65 MPs, 39 supported the recommendation.

According to the Annual Audit Report 2020-21, PHPA-I had the highest irregularities in the hydropower sector with an amount touching Nu 1.92 billion (B).

The chairperson of the PAC, Dil Maya Rai, said that the PAC had conducted stakeholder consultation and field hearing for the PHPA-I and found the PHPA-I management had 22 observations as of August 2021, of which 17 were resolved by January 5.

The remaining unresolved observations pertained to policy changes and conflicts in calculations due to differences in the contract terms, Dil Maya Rai said.

It included a decision for relocation of dam, resulting in cost and time over run, payment for materials without certainty of its use in the dam construction, incorrect computation of labour wages (net wages were computed in place of basic), allow of price variation on the contract amount without adjusting the 10 percent advance which benefited the contractor, and incorrect rate analysis (rates allowed to the contractor was higher than the applicable rate).



MPs urged fixing accountability for deferment of the project, which has been adding to the country’s burgeoning debt.

Hydropower borrowing constituted 73.40 percent (Nu 162.359B) of the total external debt in the fiscal year 2020-21.

Gasa NC member, Dorji Khandu, said that the PHPA-I was started in 2008 at the estimated project cost of Nu 35B but the cost has escalated to over Nu 93B.  “The cost incurred from the delay of a project in a year comes to Nu 365 million (M) in a year. Who should be held accountable?”

Dorji Khandu said that the committee must justify dropping of irregularities pertaining to dam site development if the barrage option gets through.



Dil Maya Rai said that the PHPA-I has unresolved irregularities of Nu 1.6B at present and that the estimated revenue generation from the project is Nu 120M to 125M in a day and Nu 45B in a year.

Paro’s NC member, Ugyen Tshering, said that the committee had submitted the same recommendations in the previous session. “It is the responsibility of RAA to restitute irregularities.”

Economic Affairs Minister Loknath Sharma said that if barrage is an option and if the RAA finds any corrupt practice in dam construction, person responsible will be dealt with the authority’s rules and regulations.

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