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Phurpa Lhamo 

Punatsangchhu Hydroelectric Project I (PI) and one of its contractors, Larson and Toubro (L&T), are negotiating a dispute regarding claims. Negotiations are being handled through arbitration.

PI and L&T are trying to negotiate a settlement after the Supreme Court of India instructed that the dispute between them be arbitrated in Bhutan.

Earlier, L&T asked PI authorities to compensate them Nu 3.91 billion (B) for keeping their machines and human resources idle after problems surfaced with the dam construction.

According to Economic Affairs Minister Loknath Sharma, during the pandemic, L&T’s establishment remained but couldn’t work. “When the work isn’t being conducted, they don’t get the money. But they have to continue their establishments, so they are asking for idling charges.”




The claims also included payment for transportation of aggregates through additional leads, interest payments on delayed payment, and payment for quarry related work.

The interests accrued is about 23 percent of the overall claim amount of Nu 3.91B. L&T made 13 claims last year.

After PI conveyed to L&T that the claims weren’t maintainable, L&T filed for arbitration in Delhi.

Lyonpo Loknath Sharma said that the case went up to the Supreme Court in India, which instructed that the dispute for arbitration be held in Bhutan.

He added that negotiating a settlement was part of the arbitration.




Meanwhile, Lyonpo Loknath Sharma said that an arbitration tribunal is on hold due to high sitting charges for the chairperson of the tribunal.

Sitting charges for the chairperson of the arbitration tribunal is about USD 11,000 per sitting.

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