Nu 4.5B spent on the project until now

Dechen Dolkar

With the two joint ventures (JV) companies to construct Kholongchhu Hydroelectric Project Limited (KHEL) unable to come to a consensus for seven years, the JV module is now dropped.

Construction of the KHEL was planned to be 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).

It was proposed that 20 percent of the capital work in the dam and powerhouse will be executed by the Construction Development Corporation Limited and 80 percent will be awarded to Jaiprakash Associates Limited. The two contractors, CDCL and Jaiprakash, agreed to do the work as proposed in the agreement. However, it was learned that SJVNL, opposed to the agreement.  SJVNL did not want to give the 20 percent work directly to CDCL and wanted to give it fully to an Indian contractor and award it as a sub-contractor to the CDLC. The  DGPC did not agree to this as being a sub-contractor would impact Bhutan’s capacity development.

Economic Affairs Minister Loknath Sharma said the project will not be a joint venture anymore when questioned by the Member of Parliament (MP), Bumdeling-Jamkhar, Dupthob on the status at the National Assembly on June 28. Lyonpo said the government is talking with the Indian government and companies. He added that it is necessary to clear all the issues of the joint venture module. “Construction of all infrastructure will be kept on hold till the issue gets cleared.”

All construction activities on the KHEL project would be terminated

Nu 4.5B was spent on the project until now. “All the bills will be paid to the contractors for the work done so far,” the minister said. The pending bill amount is around Nu 450M.

Source said the JV partners could not come to a consensus although the two governments provided them the opportunity since 2010.

“It has been  nearly 12 years since the JV partners sat across the table to take the project forward,” he said.

According to a source, there has been little progress achieved although the commitment was to complete the project construction by 2020 even after incorporating the JV company in 2015.

“With the government announcing that it was endorsing the proposal to close the joint venture, the first task, of course, would be to initiate the dissolution of the JV company,” he said.

He said that DGPC, for the moment, has withdrawn from the JV partnership and their first step is to close the JV company. “Beyond that, it would be a government decision.”

According to the source, both DGPC and SJVN agreed to reduce manpower at the site to 20 and stop construction activities to cut down expenditures. “We also requested the Cabinet to look into the matter.”

He said SJVN believes that the shareholders’ role in the implementation of the project should be limited and left to the board and management. “Even when the board sought clear directives of the shareholders to deal with the paralysis of decisions, the deliberations at the shareholders’ level resulted in a deadlock.”

DGPC as a shareholder is not able to exercise its rights and the best was to exit from the JV company.

The source said the government will have to take over the assets at the site.

He said roads and bridges have been constructed to access the different project components. Construction of residential and other buildings are almost completed.

Of the major project works packages, only the civil works package for the construction of the head race tunnel was awarded in 2021. “The contractors are fully mobilized at site and sites have been prepared to start the tunnel works,”  the source said.

The source said the closure of the Kholongchhu JV project may not appear overwhelming when considered from the perspective of the overall ambition to develop 10,000 MW by 2020. “However, with Bhutan already facing energy deficits during the winter months, it will impact the country’s energy security.”

Bhutan started to import power from India at the beginning of this year. In the foreseeable future, Bhutan will need to bank on this energy import arrangement from India to meet its domestic demand, especially during the non-monsoon months.

Final DPR of Nyera-Amari hydropower project completed

The detailed project report (DPR) of the 404MW Nyera-Amari hydropower project was completed and the government received the report two weeks ago.

Jomotsangkha-Martshala MP, Norbu Wangzom, asked the status of the project as pre-feasibility study was completed in 2014 and DPR was completed in 2018.

The DPR was done by DGPC.

Lyonpo Loknath Sharma said that it will be constructed in two phases, which will have two powerhouses, one at Gomdar and one at Martshala.

“It will cost around Nu 33B and generation cost will be Nu 4.8 per unit. If we look at economic viability, this project will be very difficult to sell electricity because so far Mangdechhu is the highest tariff export rate,” he said, adding that in our country people cannot afford more the Nu 3 per unit.

Lyonpo said that if there is the possibility to reduce the rate, the government has already requested the Asian Development Bank for funding. “But we are not sure when the project will start.”