Author: Dotu

The inaugural blasting of the outlet portal at 18 MW Suchhu hydropower project in Sangbaykha, Haa, commenced on March 11, 2023. Haa dzongda along with dzongkhag and gewog officials, contractors, DHyE officials and representatives from the local community attended the ceremony.

HRDC conducted a training on vibration-based condition monitoring testing and non-destructive testing at Rinchentse from March 6 to 10, 2023. A total of 23 participants from across DGPC power plants, DHPC, and AWP took part in the training.

Austrian Parliament delegates visited CHP and BHUTAN AUTOMATION on March 9, 2023.

USAID (United States Agency for International Development) delegates visited CHP on March 4, 2023.

As part of the Being Green initiative, a mass cleaning campaign was held at KHP on March 4, 2023.

DGPC employees across all its offices celebrated the birth anniversary of His Majesty The King on February 21, 2023. Butter lamps and zhabten (national song) were offered for the health and well-being of His Majesty.

Kuensel | Tenzing Lamsang | February 18, 2023

In a first for Bhutan, the Druk Green Power Corporation (DGPC) will fully fund and construct the 600 MW Kholongchu project on its own.

This is the first time that Bhutan will be financing and constructing a mega hydro project on its own as so far all mega projects like 336 MW Chukha, 1,020 MW Tala and the 720 MW Mangdechu have been built as bilateral projects with Indian grants and loans and joint management in the construction phase.

The same goes for the ongoing 1,200 MW Punatsangchu I and 1,020 MW Punatsangchu II projects.

Lyonpo Loknath Sharma said that the DGPC now fully owns 100% of the shares of the company after Satluj Jal Vidyut Nigam (SJVN) was paid nu 3.5 billion (bn) for its 50% shares which is its investment so far.

The minister said that as per the timeline the plan is to start construction on the project by June 2023.

The minister said that the main effort now for DGPC is to seek financing for the project.

In terms of who would buy the power he said the Government of India has agreed to buy any surplus power from the project.

The DGPC MD Dasho Chhewang Rinzin said the most important thing now is to reach financial closure or get funding so that they can take the project forward.

The MD said they are initially looking for debt financing as it makes no sense unless they have upfront commitment from banks and Financial Institutions for financial support.

“When we spoke to the GoI for taking over the shareholding of SJVNL we requested and they agreed to support Bhutan in terms of access to finance by banks and especially through their PSUs,” said Dasho.

India has the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC) which are both PSUs of India and are like public banks for power projects.

They are large in size and provide financing for large power projects.

The Kholongchu project was already in negotiation with PFC and REC earlier when it was a joint venture, and so the DGPC requested them if they can consider DGPC as a client now.

The MD said there has been some positive response and so they are following up with them on whether they are willing to support DGPC with the loan.

“If we cannot get support from them then we will have to approach other FIs, but we are hopeful that we can reach financial closure with the support of the GoI,” said the DGPC MD.

The project cost is estimated to be Nu 60 bn which means DGPC will have to raise Nu 42 to 45 bn in loans and also raise Nu 15 to Nu 18 bn in equity.

While the DGPC will seek debt financing for the loan part it is not yet decided how it will raise the equity part which it has to fully own.

The MD said when they bought the shares, apart from financing, they also asked for support to sell the surplus energy into the Indian energy market and for that too the GoI has agreed to support it.

“We will have to discuss the details of how the access will be provide with the GoI as there is no fixed conditions on how the power will be sold at the present juncture,” said the MD.

On the loan component the conditions are still to be negotiated.

“It is a commercial loan so you would expect interest rates and tenures to be similar to commercial loans. Because it is the PFC there may be some leeway but at the end of the day it will most probably look like a commercial loan,” said the MD.

As far as the works are concerned the Head Race Tunnel was already awarded to the Rigsar and Valecha joint venture at Nu 3.5 bn with 20% of the work for CDCL. The contract is still with them though the works have been put on hold for the present time.

“While no works are going on the contracts are still intact and we will have to decide when we take the project forward on how to take the contracts forward and we will have to negotiate too,” said the MD.

For the dam and power house  the bid documents are with the project and they have not yet been awarded.

“As we look for financing and other issues in the next three to four months we will also have to discuss how to take the contracts forward,” said the MD.

He said that as a single shareholder the immediate advantage is that they will not have decision making problems as there is only one party which is DGPC and its board to take decisions. There will also only be one owner and that too will make it easier to take decisions.

The new project will also have a smaller and more compact management.

The DGPC has just taken over recently around two weeks ago.

The DGPC taking over the project will also give it full flexibility in terms of the management style and project implementation and also the technology to be used.

The aim is to finish the project within 5 to 6 years from the start of construction.

The DGPC and SJVN joint venture faced several issues from the start, but even as they were resolved some issues could not be resolved. One was the refusal to give 20% of the works on the dam to CDCL, another was over management control and the final issue was differences on raising financing.

His Holiness the Je Khenpo graced KHP dam site and powerhouse on February 15, 2023. His Holiness offered thugmoen (well-wishes) for the smooth functioning of the powerplant.

Kuensel | Dechen Dolkar | February 7, 2023

Druk Green Power Corporation (DGPC) has asked for a loan from the Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and other financial institutions of India to finance 600MW Kholongchhu Hydro Energy Limited (KHEL).

Nu 4.5B was spent on the project so far. The project’s total cost is estimated at Nu 54.4B at the 2020 price level.

The first joint-venture hydropower company, KHEL, is now dropped.

During the “extraordinary meeting” between DGPC and Satluj Jal Vidyut Nigam Limited (SJVNL) decided that SJVN would transfer their 50 percent shareholding in the joint venture company to DGPC.

The transfer of the 50 percent shareholding of SJVN to DGPC was completed within January 2023.

The Managing Director of DGPC, Dasho Chhewang Rinzin, said that DGPC is now the 100 percent shareholder of the company, having completed the required shares transfer and other processes through the Registrar of Companies.

“DGPC has assumed full ownership of the KHEL on an as-is-where-is basis,” the MD said.

The erstwhile joint-venture company was in negotiations for debt-financing with the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC) of India, who are financing major power projects in India.

The MD said that DGPC has already approached PFC and REC through the Government of India to consult on continuing the same support to DGPC in providing the debt-financing for the project.

“Since this is commercial borrowing, the loan amount, including interest is expected to be around Nu 45B to Nu 50B,” Dasho Chhewang Rinzin said.

However, DGPC will have to mobilise additional funds for equity-financing.

MD said that the equity-financing is estimated at Nu 16B. However, he said that the figures could change depending on how soon the project can be started, and when it gets commissioned, the figures could change.

After the joint-venture model was dropped, the shareholders agreed to stop the construction works to cut down on expenditure.

Dasho Chhewang Rinzin mentioned that DGPC is already working with the contractors who were undertaking infrastructure works at the project site and restarting and completing it at the earliest.

Dasho Chhewang Rinzin said, “This will enable the local communities to use some of these infrastructures, especially the roads and bridges and access to water and electricity supply.”

“With the commitment and support of the two governments, DGPC is optimistic to get the project back on track and complete it at the earliest.” Dasho added.

Kuensel | Dechen Dolkar | February 3, 2023

With 87.75 percent of the project completed, the 118MW Nikachhu Hydropower Project in Trongsa is expected to commission by December this year.

The project has completed 89 percent of the headworks components which include the dam, power intake structure, main feeder tunnel, and desilting chamber complex works.

Similarly, the progress of the Head Race Tunnel (HRT) construction stands at 88.54 percent, 88.84 percent for the powerhouse complex, 66.20 percent for hydro-mechanical and 90.52 percent for the electromechanical works.

The construction of transmission lines (132kV Double Circuit Line of 18.6km) is almost complete (99.8 percent).

Project management officials said that the most critical component in the completion of the project is HRT Face 6 and Face 7.

“After going through various challenges on adverse geological conditions with heavy ingress of water, the excavation breakthrough between Face 6 and Face 7 happened on December 14, last year,” an official said.

However, the management said that the uncertainties associated with excavation have now been eliminated with the breakthrough between Face 6 and Face 7 of HRT.

The project management also said that because of the very poor geology,  the project also faced challenges in the dam excavation where they “literally had to change the methodology of excavation”.

The management said that the adversity of harsh weather conditions also hampered the work progress, where foreign workers enrolled with the contractor left the site to avoid cold weather.

The project also faced challenges for the pressure shaft excavation where they encountered extremely poor geology or shear zone both in upper and lower limb pilot hole excavation.

“Despite the restriction and supply of raw materials being interrupted during the Covid-19 pandemic, the contractor was forthcoming and put in extra effort to ensure that works at critical fronts were not interrupted,” the official said.

The project missed two deadlines so far. Of the initial estimated cost of Nu 11.89B, around Nu 12B has been spent. “The cost of the project is likely to increase to Nu 13B,” the project official said.

The tariff as per Power Purchase Agreement with Power Trading Company India Ltd is Nu 3.30/kWh.