གནས་ཚུལ།

Kuensel | Sherab Lhamo | June 28, 2023

Many rural communities in the country do not have access to a stable power supply although Bhutan is a major exporter of electricity to India.

Bardo-Trong MP Gyambo Tshering, during the question-and-answer session at the National Assembly yesterday said that people of remote areas in Samtse, Sarpang, Samdrupjongkhar, and Zhemgang dzongkhags experience frequent power outages, leaving them dependent on private generators.

The power supply is erratic in Panbang, Dorokha and Sipsu, Weringla, Jomtsangkha, and Lhamoizingkha.

The Prime Minister Dr Lotay Tshering while acknowledging the concern said that the issues would be resolved soon.

He said that the rural communities have access to only 33 kilovolts, just enough to run the household appliances and light the house. To run large machines, the supply has to be in megawatts, which the government couldn’t provide yet. “These recurring issues are not caused by low voltage but the quality of the amenities.”

Transformers, he said, are substandard. The government in collaboration with the Bhutan Power Corporation Limited plans to install quality transformers that can help detect redundancy faster.

The outages are also caused by weather conditions such as lightning and thunderstorms that cause short circuits in electric poles.

“To fix these issues, we have to insulate the wires and secure them, so that we don’t have to spend a significant amount for maintenance,” Lyonchhen said.

Challenging weather conditions, he said, delays maintenance as the team cannot reach the damaged sites on time. There are plans to relocate the electrical lines near the road, but at a higher cost.

But, to ensure constant power supply, small power plants will have increased capacity. For example, the capacity will be increased from 50 to 100 megawatts. In places like Haa, Lhuntse, and Zhemgang, the project has already started while other four places are identified for the next projects.

Such projects will help address the challenges of power fluctuations in the aforementioned places. The Druk Bindu Hydropower project will supply power to Samtse. Similarly, there are plans to start a project in Jomri that will be connected to Merak Sakteng and Dewathang. This, he said, will help to reduce power loss.

“As the use of electricity is expected to increase in the future, we are focused on increasing the production” he added.

The Bhutanese | Staff | June 24, 2023

Lyonchhen Dr Lotay Tshering went to Vienna, Austria, to attend the OPEC Fund for International Development Forum scheduled on June 20.

The Prime minister spoke as the “special guest” at the one-day forum, sharing Bhutan’s stories.

The PM met the Asian Development Bank team led by the Director General of Private Sector Operations Department Ms Suzanne Gaboury.

While continuing to work closely with the ADB country office, this is the first of an interaction with the Private Sector Operations Department of the ADB.

The prime minister invited an ADB team to Bhutan for a focused approach on private sector growth.

Environment, tourism, hydro and solar energy were also some of common areas of interests discussed.

The ADB team committed their support and reinforcement to the regional and country teams.

On the sidelines of the OPEC Fund Development Forum in Vienna, Prime Minister Dr Lotay Tshering met the finance minister of Saudi Arabia, Mohammed Al-Jadaan.

He also met the heads and representatives of the Saudi Fund and Kuwait Fund.

Among others, green initiatives, tourism and loan and technical collaborations were discussed.

Wrapping up the meetings in Vienna, Austria, Prime Minister Dr Lotay Tshering sat down with the OPEC Fund team, led by the Director General of OPEC Fund for International Development, Dr Abdulhamid Alkhalifa.

He conveyed his happiness to work with Bhutan, with active works underway for OPEC to finance two small hydropower projects. The OPEC Fund is also considering the co-financing of one mega hydropower project.

 OPEC will attend the upcoming donor coordination meeting in Bhutan in next month.

Business Bhutan | Tshering Pelden | June 20, 2023

The estimated cost for implementing solar energy in three villages of Lunana amounts to around USD 2.55 million

The Minister of Energy and Natural Resources, (MoENR) Loknath Sharma, said that the installation of solar energy in Lunana gewog has commenced, bringing electricity to numerous villages. However, three villages, namely Thangza, Tenchoe, and Dotag, are yet to receive power due to their significant size and the substantial funding required.

According to Minister Loknath Sharma, these three villages encompass a large area and require approximately 279 KW of power.

 “The estimated cost for implementing solar energy in these areas amounts to around USD 2.55 million. The government had presented a business proposal for solar energy in these regions to potential investors in Indonesia, but unfortunately, no commitments were made,” the minister said

Meanwhile, he reassured the public that discussions are currently underway to secure necessary funds for the solar installation in Thangza, Tenchoe, and Dotag.

“The government is actively seeking financial support while exploring various avenues to bring electricity to these three villages.”

During the parliamentary session’s question-and-answer session today, Member of Parliament (MP) Yeshey Dem from Khamaed-Lunana Constituency asked the minister about the status of solar installation in Lunana.

While responding to the MP’s question, the minister also highlighted  challenges faced in electrifying Lunana due to its remote location, comprising 37 villages and 180 households.

“Although a mini-hydro power project with a capacity of 500 KW was successfully implemented with a fund of Nu 500 million, it was unable to reach all areas in Lunana,” added the minister.

“Only 11 villages have received power, as we encountered difficulties in extending the grid electrification to the more remote areas,” he said.

 However, he expressed optimism about the progress made in solar energy efforts. Currently, there are nine solar clusters in operation, with installations already reaching Mendralgang school and Ramina village in Lunana. Additionally, Shangza village is scheduled to receive power this year.

Kuensel | Dechen Dolkar | June 19, 2023

… the project is estimated to cost Nu 54.4B

The Druk Green Power Corporation (DGPC) will construct the 600MW Kholongchhu Hydro Energy Ltd which will be financed through a debt-equity ratio of 70:30.

The DGPC is trying to arrange 70 percent of debt financing through Power Finance Corporation (PFC), and Rural Electrification Corporation (REC), both GoI non-banking financial institutions that invest in the energy sector in India. 

DGPC will have to arrange a 30 percent equity component, which the company hopes to raise through the capital markets. 

DGPC took over the 50 percent shareholding of SJVNL in January this year to become the sole owner of Kholongchhu Hydro Energy Ltd, the special-purpose vehicle created to construct and operate and maintain the project. 

The project is estimated to cost around Nu 54.40B at the 2024 price level. 

The officials from the project said that in May this year, a due diligence team from PFC and REC visited Bhutan. The closure of the debt-financing is expected to materialise between June and July 2023. 

The project officials also said that they are pursuing PFC and REC for debt-financing, which works out as Nu 38B but with financing charges, this could exceed Nu 50B.

The project officials also said that in the hope that the financial closure can be achieved within June-July 2023 and construction activities restarted immediately, the contracts for the major civil works packages such as the dam, head race tunnel, and powerhouse have been kept alive. 

“The consultancy agreement with WAPCOS has also been kept alive but under the suspended mode,” project officials said.

However, officials said that no major construction activities are taking place at the site, DGPC has a small group of officers at the site to watch the completed infrastructure as well as to continue and complete the construction of balance infrastructure works such as the roads, construction of power, and colony (residential and non-residential). 

However, officials said that at present they are under negotiation on the modality of repayment with the PFC and REC.

The project officials said that most of the energy will be consumed within the country during winter months. “We are working with the GoI for the sale of the summer surplus power to India.”

The Bhutanese | Tenzing Lamsang | June 17, 2023

An eight-member expert committee had been set up by Bhutan and the Government of India (GoI) as a final attempt to reach a solution on the 1,200 MW Punatsangchu-I project.

After delays, the committee had got an extension until June 2023 and they are supposed to submit a report soon.

However, according to a reliable source despite the several presentations and talks there was no common ground reached in the last discussions held in Delhi earlier this month among this group.

The 4 experts from India stuck to the earlier position of saying it is safe enough to build a dam on the current site while the Bhutanese side did not agree and pressed for the cheaper barrage idea.

The experts from the Indian side says there there is no danger and movement of the right bank hill has subsided. They say the shear zone has come to the surface and is not deep rooted and can be fixed using piles and the dam can also be made on piles. Piles are essentially giant concrete nails driven into the mountain side to secure it.

They are insisting on the dam and saying no to the barrage and are asking why it even came up.

The Indian experts also feel that an S shaped stilling basin can be built which is not done in other places. A stilling basin absorbs the energy of the water as it leaves the dam to prevent erosion. 

The Bhutanese side does not feel it is safe so they cannot move ahead with these kinds of assumptions.

The worry for the Bhutanese side is not only the right bank hill but also the hill settlement and Bjimithangka colony above where there is some disturbance on the road side  and movement with cracks above the road.

While the Indian side say the movement has subsided on the right bank, but that is probably because there is no work and digging going on below.

Sources from the field say that the inclinometers put to give reading of any movement still show that there is some internal movement on the slope.

This makes the dam site still very vulnerable.

The Indian experts, who are mainly relying on the advice of the P-I lead consultant WAPCOS, say the dam can be built at certain angles and with piles underneath securing the base and piles driven into the right bank to pin the slide areas.

However, the Bhutanese side would not be okay with this as a lot of piles driven into the right bank in the past at huge cost had failed spectacularly twice and had failed to arrest the slide. None of the piles are functional and most of them are lost. More so as it was done under the guidance of the same consultant WAPCOS.

The Indian side is being guided by the WAPCOS under whose watch the entire problem of the right bank unfolded with failed mitigation measures but WAPCOS still has not changed its stance saying that the dam is possible.

The biggest worry for the Bhutanese side is that once the dam is built and there is a problem then it would also wipe out the P-II project downstream and the future Sunkosh project and this huge wall of water would lead to loss of human settlements and lives in both Bhutan and India downstream. The Bhutanese side is unwilling to take that risk.

The Indian experts have argued that the barrage will be impacted during an earthquake, but the Bhutanese side is confident there is a technology that can be used during construction take make it secure.

Stucky, the DGPC hired third party consultant, did many presentations on the barrage and are very sure the barrage can be done and they can manage it, but the other side is not even considering it.

The Bhutanese side feels that the piles will mean an additional Nu 25 to 30 bn in construction costs when already around Nu 24 to 25 bn has been spent at the dam site. With no agreement from both sides it is unlikely that the final report will have any solution with the deadline to submit the report being this month.

Way forward?

Once the report comes in the government will have to think of the way forward for the project.

One way forward could be Bhutan insisting the dam is not safe and going with the barrage.

If the Indian experts and WAPCOS insists on the dam, then another option is going for a legally executable agreement which asks by when they will finish and if they do not finish then they start paying Bhutan the revenue the project is supposed to earn.

Also, if anything happens to the dam within the lifespan of the dam then they will bear all the accountability and responsibility and if anything happens to the other things like the hill and other projects then they will also have to bear the responsibility.

One option is for Bhutan to look for the top up money and go for the barrage.

If nothing works, and the barrage is not agreed to then the project may have to be suspended.

With the technical experts looking like they cannot come up with a solution then another option would be to escalate the matter to the diplomatic and political level where the leadership of both countries take a decision.

The worse case scenario is for the project to be completely abandoned and in that scenario a big question will be on what about the money already spent so far.

So far more than Nu 83 bn has been spent on the project, but in case the project is abandoned it will have to be dealt differently and diplomatically as the fund is for the project and not for either government. The funds, in short, may have to sink with the project.

The minister for Energy and Natural Resources Loknath Sharma in the past had assured that this project would be sorted out before he leaves office but that looks unsure now with how things are playing out.

However, while things are not going well an official said that the P-I project is too important for both sides to not be able to agree or to be left like that and the official said both sides are consulting and working hard to come up with a solution.

A clue to the whole problem is in the traditional name ‘Bjimithangka’ which means a place with a lot of sand.

Background

The problem all started in 2008 when the then PHPA MD R.N Khazanchi proposed to change the original dam site to generate more power. The then cabinet agreed in June 2008 based on Khazanchi’s presentation.

A Joint Audit Report of the Royal Audit Authority (RAA) of Bhutan and the Comptroller General Audit of India (CAG) of 2012-13 said that the PHPA, its main consultant WAPCOS and CWC knew that there were geological weaknesses at the right bank area but still went ahead with the tendering of the dam on the same site in 2009.

Instead of conducting further investigations PHPA’s overall consultant WAPCOS, on behalf of GSI, issued a clearance for the project dam bids to be opened on 16th February 2009.

The problem made itself known with a major slide on the right bank in July 2013 which at the time the overall consultant WAPCOS and the civil consultant CWC said could be fixed with Nu 3.5 bn of mitigation measures which included concrete piles. However, despite the measures another major slide happened in August 2016 and again despite additional mitigation measures of more concrete piles and other measures the same area slid on 22nd January 2019. A total of Nu 4.85 bn spent on mitigation measures had failed.

After this, the government in the 21st PHPA Authority meeting in January 2019 insisted to the Indian consultants to come up with a comprehensive solution.

CWC was tasked to come up with a holistic solution to strengthen the Right Bank without which construction of the Dam on the right bank side could not proceed.  The report was submitted by CWC on 1st October 2019 and detailed drawings later in December of the same year.

One suggestion of the CWC was that the dam on the right bank side be constructed over 288 concrete piles driven into the ground to avoid excavating the shear zone below the right bank side

The Bhutanese side not very convinced with the idea of concrete piles under the dam for the long term and feeling the need for an overall review of CWC’s proposal called for a review in the Technical Coordination Committee meeting

The National Hydro Power Corporation (NHPC) was then called upon to do a third party review of the WAPCOS and CWC proposal.

The NHPC in mid 2020 presented its review of the CWC report as a third party and disagreed with the CWC assessment and said the factor of safety is below 1 and hence it is not safe enough to build a dam.

The NHPC instead recommended to build a smaller structure in the form of a barrage 820 meters upstream of the current site.

The project authority asked the two companies with different findings to reconcile their contradictory findings. The two companies came back giving a factor of safety of 1.4 safe enough for a dam.

However, this calls into question how the NHPC drastically changed its own stance and data to fit in with the CWC.

The government through DGPC had hired a foreign company Stucky to do a review of the review which also showed the current site to be unsafe with a recommendation for a barrage.

If the dam is abandoned of the Nu 23 bn spent on it around half of the cost in other structures like the 4 large de-silting chambers and around 11 km of tunnels can be reused for the barrage.

Kuensel | Dechen Dolkar | June 13, 2023

Construction of three small projects started

With the aim to generate 10,000MW of electricity by 2020 long failed, the new focus is to generate around 7,600MW from 10 projects.

According to the 2023-24 budget report, the 10 projects in pipeline are the 600MW Kholongchhu hydroelectric project, that has come to a halt, the 2,640MW Kuri-Gongri hydroelectric project, 1,125 Dorjilung hydropower project, 404MW Nyera Amari hydro-power project, 180MW Bunakha reservoir hydroelectric project, 2,500MW integrated Gongri reservoir/Jerichhu pumped storage project and five small hydropower projects that will generate 181MW.

The budget report, presented to the Parliament on Friday, states that the government will resume the implementation of the 600MW Kholongchhu HEP. The Joint Venture has been closed and the Druk Green Power Corporation (DGPC) has bought the shares of SJVNL in January this year. Discussion on debt financing for the project is in progress.

Officials from DGPC said that they are waiting for funds to start the project.

The report also states that the detailed project report of the 2640MW Kuri-Gongri HEP is being undertaken with WAPCOS limited, India as the consultant. The consultant has presented the draft DPR to the stakeholders in May, this year.

Meanwhile, the DPR for Dorjilung HEP, which DGPC has undertaken, is expected to be completed by December 2024. The World Bank has been requested to take the lead in coordinating a consortium financing for Dorjilung.

The project reports for 404MW Nyera Amari HEP and 180MW Bunakha reservoir HEP have been completed. The ADB has been requested for project structuring to take the project for-ward. The Nyera Amari HEP and Bunakha Reservoir HEP is expected to generate 1,599 million units and 719 million units annually.

DGPC is also carrying out the feasibility study of the 2,500MW integrated Gongri HEP reservoir/Jerichhu Pumped Storage Power Plant (PSPP). The integrated project aims at making use of the project component of Gongri project as the lower reservoir. The development of a reservoir/pumped storage type of hydropower project will play a critical role in enhancing energy security, managing power deficits, and maintaining grid stability besides enabling industrial growth, according to the report.

Feasibility study of five projects under Phase-2 small hydropower projects with a total installed capacity of 181 MW is currently on-going and is expected to be completed by June this year. Construction of the projects – 90 MW Jomori, 45 MW Gamri-I, 26 (18+8) MW Druk Bindu I&II, and 20 MW Begana – is planned to commence immediately after the study is approved.

Ongoing hydropower projects

The long delayed 1,200MW Punatsangchhu-I hydroelectric project is still waiting for the decision of the Inter- Governmental Group (IGG) whether to go ahead with the dam or switch to the barrage option.

As of April this year, Nu 85.2B has been disbursed to the 1,200MW Punatsangchhu-I. 87.7 percent of the works have been completed. The IGG was constituted on January 16 this year to review and find a technically safe and cost-effective way for-ward. The group is expected to submit the report to the two governments this month.

The 1,020MW Punatsangchhu – II project is scheduled to be commissioned in 2024. The project on the same river which start-ed much later will see cost escalate from Nu 72.9B (March 2015) to about Nu 94.4B. As of April, a total of Nu 79.7B has been disbursed and 94.7 percent of the works of the project has been completed.

The 118MW Nikachhu HEP will be the first to be commissioned. Commissioning is scheduled for later this year. The total project cost is estimated at Nu 11.964B. As of April, the project has spent Nu 11.903B and the overall project progress stands at 92.6 percent.

Small projects

Three small hydro projects with a total installed capacity of 104 MW are currently under construction. The projects – 54 MW Burgangchhu, 32 MW Yungichhu, and 18 MW Suchhu, are planned to be commissioned between 2024 and 2025. A total fund requirement of Nu 9.320B is projected.

Kuensel | Yangyel Lhaden | June 8, 2023

The 11.7-kilowatt solar panels installed in the campus of Ministry of Energy and Natural Resources (MoENR) generated 19,753 units of energy in kWh as of May 26.

Without considering appliance efficiency and power fluctuations, this amount of energy is sufficient to power a 10-watt LED light bulb continuously for approximately 225.6 years, operate an electric stove with a power rating of 2,000 watts for around 411 days, keep a refrigerator running at 100 watts for approximately 22.6 years, and run an air conditioner with a power rating of 1,500 watts for approximately 547 days.

On average the solar panels have generated 897.8 units of energy in a month which is enough to power eight rural residential consumers, 10 highlander consumers, and three urban consumers in a month, considering the average monthly energy consumption per consumer data from Bhutan Power Corporation (BPC). 

According to BPC data, 128,111 rural residential consumers consume on average 104.9 units of energy, 1,478 highlander consumers use 91.34 units, and 62,145 urban consumers use 244.2 units of energy in a month. 

Taking into account the tariff rate set by BPC, the MoENR office had the potential to save Nu 79,583 over a span of twenty-two months by using solar panels. 

The grid-tied solar panels were installed on the roof of a car park in 2021. The purpose was to showcase renewable energy on campus and provide practical experience to energy officials. Since August 2021, the panels have been generating and supplying energy to an office building.

Grid-tied solar plant

In the grid-tied solar plant, electricity is fed to a transmission line so that solar and hydropower energy can complement each other when solar energy is in short supply.  

According to Ugyen Rinzin, an engineer from the energy department, while the monetary value of the energy generated from the solar panels may not be substantial due to the low tariff rate, its actual energy output is significant. 

“What’s important is to work on diversifying energy in order to complement the existing hydropower generation,” Ugyen Rinzin said. 

The officials of the energy department have been engaged in operating and learning practically about the solar plants on the campus. Ugyen Rinzin said that with the demonstration project, the department gained much hands-on experience.

After the demonstration project, the energy department officials designed and installed solar projects with contractors in Aja Ney and Mendrelthang extended classrooms in Lunana.

“Hereafter, we are confident that we can undertake small-scale solar projects encompassing everything from designing to installing,” Ugyen Rinzin said.

The energy department has laid out plans to implement various solar projects including the installation of a small-scale 21-kilowatt solar system in Shangsa village, Lunana. The department is also working to provide three-kilowatt rooftop solar panels to 304 economically disadvantaged households in rural areas. 

The department is also studying seven sites for solar projects out of which three sites would be chosen. Feasibility studies on the implementation of solar panels on roofs of institution buildings and a 17.3-megawatt solar project in Seyphu are underway.

BBS | Devika Pradhan | June 4, 2023

Considering the need for clean and renewable energy in the country, a Rooftop Solar plant has been installed at the Centenary Farmer’s Market in Thimphu. It is the largest solar installation in the country with a capacity of 250 kilowatts. The project which is implemented by His Majesty’s Secretariat was commissioned today coinciding with the Birth Anniversary of Her Majesty The Gyaltsuen. The plant is expected to generate over 360,000 units of electricity annually.

During the commissioning ceremony today, the Minister for Energy and Natural Resources, Lok Nath Sharma said that it is an excellent initiative to generate electricity during winter which is an off-season for hydropower.

The status of the project and power generation is displayed in the control room at CFM.

Although the rooftop solar plant is installed at the Centenary Farmer’s Market, the electricity generated will be directly fed to the Bhutan Power Corporation’s grid which means it will be supplied to the consumers.

The project has largely been undertaken by Bhutanese engineers. Apart from monitoring, testing and quality assurance by a foreign expert, 13 DeSuups from the DeSuung Skilling Programme and engineers carried out the work.

The project titled CFM Solar Rooftop started in December last year and was completed in six months.

The Bhutan Trust Fund for Environmental Conservation provided a grant of over Nu 16 M.

A little over Nu 13 M was spent on the project.

The project has been implemented to work towards the country’s energy security needs.

Likewise, the project also strives to establish the technical and economic viability of solar panels in the country and pave the way for both private and public entities in the country.

Bhutan Solar Initiative Project has been instituted under the Royal Command of His Majesty the King to advance solar photovoltaic energy initiatives in the country to build local capacity in the area.

Kuensel | Thukten Zangpo | June 3, 2023

… power import up by over 50 percent, export fall by over 80 percent

Hydropower generation saw a drop of 7.5 percent between January and April compared to the same period last year.

The overall generation was recorded at 1, 385.97 million units in the first four months of 2023 compared to 1, 498.18 million units of electricity in the same period the previous year.

Managing Director of Druk Green Power Corporation (DGPC), Dasho Chhewang Rinzin said that the decrease was because of shutdown of Tala hydropower plant for the repairs and maintenance of the underwater infrastructure from January to March 16 this year and because of poor hydrology.

In the first four months of 2021 and 2020, the hydropower generation was 1,270 million units and 1,322.87 million units respectively.

The decrease in electricity generation and increase in the domestic consumption by over 40 percent led to the fall in export of electricity by over 80 percent.

The country’s export of electricity fell to 65.33 million units as of April this year compared to 543.13 million units in the same period the previous year. In monetary terms, it decreased to Nu 268.19 million from Nu 1.85 billion.

The export figure includes only the DGPC plants–Tala, Chukha, Kurichhu, Basochhu and Mangdechhu, and excludes Dagachhu power plant. Dagachhu’s electricity export was recorded at Nu 141.77 million in the first four months.

However, the domestic consumption of electricity increased to 1, 252.44 million units worth Nu 2.44 billion compared to 872.72 million units worth Nu 1.7 billion as of April last year.

In an earlier interview, Dasho Chhewang Rinzin said that an increase in domestic consumption affects overall revenues since the domestic tariff generation is lower than the export tariff.

The DGPC has forecasted the total generation of around 10,798 million units this year from the DGPC plants.

Bhutan also had to import about 50 percent more electricity in 2023. Bhutan purchased 367 million units of electricity worth Nu 1.73 billion for four months from January to April.

The import saw an increase by additional 127 million units or Nu 927.27 million compared to the previous year.

For 2022, Bhutan purchased 240 million units worth Nu 798 million from January to March. The energy import was passed on to high voltage consumers.

According to the DGPC, the import approval for 2022 was sought from the Indian government for the first three months where the purchase was made from the Day Ahead Market of Indian Energy Exchange through a competitive bidding process.

The exchange prices are determined through double-sided auction from buyers and sellers and prices are determined through competitive bidding for every 15 minutes time block, the DGPC MD said.

Kuensel | Thukten Zangpo | June 3, 2023

600 MW Kholongchu potential funders finish project visit and will give answer soon

The much talked about 1,125 MW Dorjilung project has finally gotten a lease of life as the government has written a formal letter to the World Bank asking them to look for the funding of Dorjilung project through consortium financing.

Consortium Financing means involving other international banks as the project would be too big for the World Bank (WB) to finance alone.

It is understood that the WB is already in talks with the European Investment Bank (EIB) so far.

The Prime Minister Dasho Dr Lotay Tshering had traveled to Europe to meet among others EIB heads to seek loans for projects in Bhutan.

The last estimated cost of the project was put at Nu 74 bn, but the latest estimate could be USD 1.2 to USD 1.3 billion.

The WB will work on mobilizing the funds and there will be discussions also on the loan interest rates and payment module.

This latest move by the government means that the earlier and original plan to make Dorjilung a trilateral project built in Bhutan with funds from Bangladesh to sell power via India to Bangladesh has been dropped.

Bhutan and Bangladesh signed an MoU on the project in February 2016, but the third partner India while voicing verbal support for the project never came on board.

The old DPR of the project is being updated to meet with international best practices to get international financing for taking the project forward.

The WB being a bank is not expected to give any grant component and there is no clarity yet at what rate they will give the money.

Even if the loan interest rate is lower than the usual 10 percent loan interest rate in bilateral projects between Bhutan and India one thing Bhutan will have to factor in is foreign exchange losses when the Ngultrum depreciates against the dollar in the future.

This may bring the financial loan cost similar to or nearby those charged in bilateral projects.

For different types of loans the WB and other international lenders have different interest rates so at the end they will come up with something for Bhutan.

Till date Bhutan has never failed to pay back project loans to India in time. The effort from Bhutan will be to ensure that the WB led loans are structured in such a way that it can be paid back comfortably.

Right now there is no talks on selling power to Bangladesh via India from this project but in the future an effort could be made.

This is especially after the recent announcement that Delhi and Kathmandu have agreed to let Nepal sell power to Bangladesh via India. This opens up hope that Bhutan can do so too in the future.

Kholongchu

In terms of the 600 MW Kholongchu Project everything is ready and the government is following up strongly to get funding for the project.

Around 10 days ago the technical team of the two potential funding agencies Power Finance Corporation Ltd (PFC) and Rural Electrification Corporation Limited which are both Indian public sector power project funding companies, came here to do due diligence.

A source said, “We are very positive we might get funding. They came here did due diligence and went. Our idea is that by this month end if they can give us the conclusion that they are ready to fund us or not.”

Both of the above projects seeking international financing one from the World Bank and another from Indian government companies show an evolution in Bhutan’s hydropower journey which was previously mainly reliant on Inter-Governmental models.

The source said, “One thing is for sure which is that we won’t be able to construct like in the past using the IG model. The IG model is time tested but a little outdated now as GoI itself is not in a position to give all money in the same manner like in the past.”

While Bhutan may suffer on the front of assured funding, the building of projects through commercial loans will allow Bhutan full management control, choice of companies and technologies and also full control over the execution of the project.

P-I

On the 1,200 mw Punatsangchu I project the meeting of the eight member inter governmental committee with 4 from Bhutan and 4 from India is still not concluded. They have been given the final time extension as technical and financial issues are taking time.

They are expected to submit a report by mid of June or within this month as their Terms of Reference says so.

Earlier the Bhutanese side was in favour of the barrage while Indian officials were not very comfortable with the barrage and wanted to do some safety measures to build a dam. Stucky the consultant hired by DGPC to do the DPR of the barrage was called by the committee to answer questions.

So far both sides are only presenting things but have not gone down to discussions as such. A source said the aim is not to try to stick to positions but to find a solution as the project is too important to stick to earlier positions.

The team is trying to find some things out on its own. The presentations are done and now they will go for the discussions.