Yangyel Lhaden
Trongsa—In just seven months since its launch, the 118 MW Nikachhu Hydropower Project (NHP) has earned around Nu 973 million by selling about 266 million units of electricity.
The NHP began exporting electricity to India on January 25 this year. The project aims to generate 491 million units of electricity, earning about Nu 1.6 billion annually.
By July, the project had reached about 50 percent of its energy generation goal and 61 percent of its revenue target.
The NHP supplies electricity to three key buyers: 80 percent to the Power Trading Corporation of India (PTC) while 20 percent is distributed between the Bhutan Power Corporation (BPC) and the Indian Energy Exchange.
The plant also supports the Mangdechhu Hydropower Project (MHP) by discharging water from NHP, benefiting MHP with increased flow for energy generation. Nikachhu and Mangdechhu dams are located in the same river basin, with Nikachhu situated upstream and Mangdechhu downstream. Revenue from this arrangement is split equally between the two projects.
Electricity tariffs are set at Nu 3.3 per unit for PTC, Nu 3.890 per unit for BPC, and to the highest bidder on the Indian Energy Exchange through competitive bids every 15 minutes.
As of July, NHP had sold 155.674 million units to PTC, generating Nu 513.725 million; 37.437 million units to BPC, amounting to Nu 146.927 million; and 26.372 million units on the Indian Energy Exchange, bringing in Nu 144.149 million.
The additional water supply to MHP contributed 46.326 million units with added revenue of Nu 168 million to NHP.
Funded primarily through loans from the Asian Development Bank (ADB) and Indian commercial banks, the NHP received USD 120.5M through Asian Development Bank.
The ADB provided USD 25.25M under concessional ordinary capital resources lending, which offers a 32-year repayment period with an eight-year grace period and a one percent interest rate.
Additionally, USD 70M was provided under ordinary capital resources lending, with a loan interest rate of 5.6 percent, and USD 25.25M was given as a grant.
Two Indian commercial banks—the State Bank of India and the Export-Import Bank of India—provided USD 58.821M loan for the project with a 15-year duration, including a five-year grace period and a 10-year repayment term, at an interest rate of 12.15 percent.
The completion of the project saw a 36 percent increase in its cost, with the final expenditure reaching about Nu 15.99B compared to the approved amount of about Nu 11.67B.
“The construction of NHP saw numerous challenges escalating the cost and delaying the completion date,” Sujan Rai, interim chief executive officer of Tangsibji Hydro Energy Limited said. “The three main drivers for cost escalation and delay were geological issues at the site, cash flow, and the pandemic.”
Originally scheduled for completion in 2019, the deadline was extended first to 2021 and then to 2023.
Sujan Rai said that during the monsoon season, energy generation had been high due to increased rainfall. “The annual target could be achieved if the remainder of the monsoon continues to bring more rainfall.”
In January, the power plant generated 3.8 million units of energy. This output increased steadily over the following months, reaching 12.2 million units in February and 14.2 million units in March. By April, energy production had risen to 18.3 million units and continued to grow to 24.9 million units in May.
The plant experienced its highest production in June and July, with 52.9 million units in June and peaking at 93.4 million units in July.
According to the ADB’s April Outlook, NHP’s operation is poised to significantly boost economic growth, complementing a projected 6.5 percent growth in the services sector and a 2.5 percent rebound in industry, excluding construction.