Shift from IG to other modalities of HEP financing observed

Yearender/Hydropower: Albeit the 10,000MW by 2020 is dead and down the rivers, the Sheep year unfurled a new era in Bhutan’s hydropower ambition as the country brace for a different modality of implementation, swaying from conventional inter-governmental model.

Exactly a year ago, the 126MW Dagachhu came on line, taking the country’s installed capacity to 1,606MW.

Despite the series of delays, it is a remarkable achievement in the power sector since the construction and project management was fully manned by Bhutanese.

Following this, the year marked some Joint Ventures (JV) projects materialize, where the local utility company, Druk Green Power Corporation (DGPC) is fully involved.

The construction of 600MW Kholongchhu is in full swing. Paper works on other JV projects like 570 MW Wangchhu, 180 MW Bunakha and 770 MW Chamkharchhu projects has also advanced well. However, government has decided to prioritize Chamkharchhu, which is in advance stage of implementation.

It is estimated that total investment on these projects would equal almost twice the size of country’s economy.

Transformation in the hydropower sector took a major turn when financial deal for 120MW Nikachhu was struck.

Besides raising a loan of Rs 3.53B from consortium of Indian banks, the project also announced that it would divest 20 percent of its share to the public, making it the first project to raise capital from public. The total project cost is expected to be Nu 11.89B, the debt to equity ratio is 65:35, which means that about Nu 7.73B would be raised from loans and the remaining Nu 4.16B as DGPC’s equity.

The 1125MW Kuri-I or the Rothpashong project is also anticipating another twist in the hydropower tale. Towards the last quarter of the year, initial deals on the project indicate that a trilateral cooperation between Bhutan, India and Bangladesh is likely for the implementation.

With the diversion of Tsibjalamchhu into the Tala dam, Tala’s generation was enhanced by 83 million units.  Similar feature is also envisaged in Mangdechu.

As for the on going IG projects, the Punatsangchu II project started construction of the dam on April last year. In May, the Mangdechu project began concreting the foundation of the dam, which will block the Mangdechu and divert it through the tunnels.

All’s not well

While the strengthening measures along the Punatsangchu I was progressing well, the project is already running behind schedule by two years now.

The Punatsangchhu-II reportedly came short of a similar disaster when the left bank of the project site almost slid because of poor geology in Feb. 2015. Remedial measures had to be taken using cable anchors to support lose mass and prevent it from sliding.

As a result, the completion of this project is delayed. While the initial cost of the project was Nu 37.78 B, it was revised to Nu 75 B

That Bhutan’s hydropower construction spree in the recent years has increased debt burden on the country is still raising concerns.

Concerns are emerging over Bhutan’s profligate spending on a single sector and severe risk of climate change effects and has a huge social and ecological cost.

However the government, both the former and the current, has stressed that hydropower debts are self-liquidating. Legislators are sheep and wool in going ahead with harnessing more hydropower.  They bleat that the debt is sustainable because projects will eventually generate significant revenue, boost exports and fuel economic growth.

The year also witnessed debate among the environmentalists and government sprouting in the social media on the Chamkharchu project.

Environmentalist lobbied against damming all the rivers in the country, especially demanding free flow of chamkharchu. The cabinet’s answer was simple; “The petition is a decade too late.”

Renewable energy also got a boost with the first two wind turbines spinning and producing energy enough to light 300 homes. The Prime Minister inaugurated the 300kw wind turbines in Rubesa, Wangdue in January.

As we stride into fire Male Monkey Year, the nation can expect many interesting developments in the hydropower sector and its consequences, both good and bad.

Tshering Dorji