The project would enhance Mangdechhu power generation by 324MU

Hydro: A German manufacturing company, Voith Hydro Private Limited, will take up the electromechanical works for 118MW Nikachhu project after it secured the bid.

The company signed two separate contracts worth Nu 1.5B for supplies and execution of electromechanical works with Tangsibji Hydro Energy Limited (THyE), a special purpose vehicle to implement the Nikachhu project.

“Bhutan’s is a pioneer in hydropower sector and we are excited to participate in it,” the member board of management for Voith, Sumeet Mazumdar said. “The way Bhutan develops hydropower projects in consideration to environmental and social aspects are exemplary.”

He said the 150-year old company is investigating the possibility of shortening the height of powerhouse by compacting the turbine. This, he said would bring down the cost of civil works.

While signing the contract, the chairman of THyE and the economic affairs secretary, Dasho Yeshi Wangdi said it is important for Voith to realize the special features of the Nikachhu project.

Albeit being a medium size project, Dasho Yeshi Wangdi said Nikachhu has unique features both by layout and the modality of implementation.

The project is capable of generating 491.52 million units (MU) annually on its own but it will allow the water discharge from powerhouse to pour into the Mangdechhu dam, thus augmenting the Mangdechhu generation by 324 MU.

The 100 percent subsidary of Druk Green Power Corporation is also in the process to attract equity partners and divest about 25 percent of the shares to public. Dasho said the project also has features that offer maximum benefit to local contractors and suppliers, besides employing more Bhutanese.

“We expect Voith to leave behind a legacy,” he said.

The tendering was done in two stages following the international tendering process. “We can ensure that the best contractor was selected at best evaluated price,” Dasho Yeshi Wangdi said.

The contracts were awarded based on engineering, procurement and construction (EPC) practice.

Under this practice, the contractors will carry out the detailed engineering design of the project, procure all equipment and materials, construct and deliver a functioning facility or asset to their clients.

Because of the nature of contract, least cost escalation is expected. Even the geological risks would be taken care by the contractors.

THyE’s managing director, Karma Chhophel said the company is negotiating with several contractors for the civil works. By January, he said civil works would be awarded and soon after, activities for main components would commence.

Last month, the project signed the financial deal securing a loan of Rs 3.53B- Rs 2.5B from the State Bank of India and Rs 1.03B from EXIM bank, India.

While 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 Asian Development Bank is also financing about Nu 3B, half of which is grant and half loan.

Tshering Dorji