Initial works begin after a two-year hiatus

Dechen Dolkar

After a two-year hiatus, the works on the 600MW Kholongchhu Hydropower Project has restarted, with initial contract works commencing at the project sites.

The Project issued a letter, notifying Jaiprakash Associates Limited and Construction Development Corporation Limited (CDCL) to begin mobilising the initial contract works starting from mid-July.

A small number of workers have already arrived at the sites to begin these works.

While discussions are ongoing regarding the strategic partnership with Tata Power, the Druk Green Power Corporation (DGPC) has instructed contractors responsible for the main civil works packages, which constitute the construction of dam, powerhouse, and headrace tunnel, to mobilise and undertake preparatory works.

The initial activities include construction of the diversion tunnel at the dam, tunnel adits for the headrace tunnel, and access tunnels to the powerhouse and pressure shaft.

The actual construction of the dam, powerhouse, and headrace tunnel will however commence only after the strategic partnership with Tata Power is finalised and financial closure for debt financing is achieved.

According to project officials, undertaking these preparatory works will save construction time once the main works begin.

The preparatory works are estimated to cost around Nu 1.5 billion, which will be pre-financed by DGPC.

The interim contract works will begin within 30 days from the issuance of the notice.

Project officials estimate the total cost for the contract works to be in the tune of Nu 20 billion. Of this, Nu 15.9 billion has been awarded to Jaiprakash Associates Limited and Nu 991 million to CDCL.

Kuensel has learnt that contracts will also be awarded to Rigsar Construction Private Limited and Valecha Engineering Limited from India, who will execute the work as a joint venture. The total cost of the hydropower project is estimated at Nu 54 billion.

The construction of the Kholongchu hydropower project stalled in 2022 when the two joint venture (JV) companies tasked with constructing the project dropped the JV model after failing to reach a consensus for seven years.

The construction of Kholongchhu was initially planned to be financed through a debt-equity ratio of 70:30, with 50-50 equity holdings between DGPC and Satluj Jal Vidyut Nigam Limited (SJVNL).

The proposal was that CDCL would undertake 20 percent of the capital work on the dam and powerhouse while the remaining 80 percent would be handled by Jaiprakash Associates Limited. Though CDCL and Jaiprakash agreed to this, SJVNL opposed it, preferring to directly award the 20 percent work to an Indian contractor and then subcontract to CDCL.

DGPC did not agree to this approach, citing concerns about its impact on Bhutan’s capacity development.