Nikachhu Hydro Energy will be a model project

The construction of the project will begin by July

Hydropower: Construction of the Nikachhu Hydro Energy project in Trongsa could start as early as July this year.

Tangsibji Hydro Energy Ltd, the project developer, awarded the final contract for civil and hydro-mechanical works of the 118MW project to Hindustan Construction Company Ltd on April 20.

The contract includes procurement of works, plant, services for construction of civil structures, erection, testing and commissioning of hydro-mechanical equipment of the project.

The contractor has three months to mobilise material and labour to begin works.

The four-year contract worth more than Nu 4.58 billion was awarded through an international competitive bidding.

The project has numerous unique features in terms of layout and modalities of implementation that make it a model project of its size in the country.

Economic affairs secretary Dasho Yeshey Wangdi said a special layout of the project allows the water from its turbines to be let into Mangdechhu project’s dam.

“Although it would be generating only 492 million units on its own, through this layout it’d be adding almost 324 million units, almost 65 percent of its own generation, and that too precious firm energy generation from the Mangdechhu HEP,” the secretary said.

THyE has a power trader, which has been selected upfront through competitive bidding process. A power purchase agreement has been drawn with PTC India Ltd. It means that tariff of Nikachhu is determined upfront.

Although right now it is a fully DGPC owned company, it plans to divest its shares to the public.

“Therefore what we see in Nikachhu is a different modality of implementation, far different, in terms of financing and structuring, with added features that we did not see in the Dagachhu project”, he said.

Asian Development Bank has committed USD 120.5 million for the project. THyE borrowed INR 2.5 billion from State Bank of India and INR 1.03 billion from EXIM Bank.

While the total project cost is expected to be Nu 11.96B, the debt to equity ratio is 65:35, which means that about Nu 7.73B would be raised from loans and the remaining as Druk Green Power Corporation’s (DGPC) equity.

According to contract documents, there are provisions allowing maximum benefit to the local contractors, local service providers and manufacturers and suppliers of construction materials and that allow maximum employment to the Bhutanese.

“Supply of major construction materials, stone aggregates and sand, have been awarded to two local contractors,” Dasho Yeshey Wangdi said.

He said that the project follows stringent environmental and social safeguard measures which were finalised after extensive discussion with local affected communities.

The project provides an arena for capacity building of Bhutanese engineers and managers to manage construction of hydropower projects.

“Given these unique features, the project stands to become an exemplary one,” Dasho Yeshey Wangdi said.

Nikachhu hydropower project is the first project for which DGPC prepared the feasibility report and undertook the detailed project report preparations.

THyE was created as a fully owned subsidiary company of DGPC in April 2014 to undertake the implementation of the Nikachhu Hydro Energy Project.

The project is expected to complete in mid 2020.

Tshering Palden

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