An­nual re­port em­pha­sizes hydroelectric power’s im­por­tance to Bhutan

Bhutan Times - - Editorial - (Courtesy: Hy­dro World com)

An an­nual re­port re­leased this week by the Royal Mone­tary Author­ity of Bhutan un­der­scores the eco­nomic im­por­tance of hydroelectric power to the Hi­malayan coun­try.

Hy­dropower -- iden­ti­fied re­cently as one of the coun­try’s “Five Jew­els” -- was Bhutan’s largest ex­port through the past fis­cal year, ac­count­ing for 32.4% of the coun­try’s to­tal ex­ports and 8% of its gross do­mes­tic prod­uct. The re­port also showed Bhutan’s econ­omy should grow by a rate of about 10.2% should work con­struc­tion on and com­mis­sion­ing of ex­ist­ing hy­dro projects con­tinue as sched­ule.

“Bhutan’s fast-flow­ing rivers have been tapped to build run-of-river hy­dropower plants that have in turn driven eco­nomic growth and greatly boosted progress in meet­ing many of the coun­try’s so­cio-eco­nomic de­vel­op­ment ob­jec­tives,” the Royal Mone­tary Author­ity (RMA) said. “The tap­ping of hy­dropower in Bhutan has also been a story of suc­cess­ful bi­lat­eral co­op­er­a­tion and en­ergy trade be­tween Bhutan and her most stead­fast de­vel­op­ment part­ner, In­dia.”

Bhutan’s re­la­tion­ship with In­dia has led to the de­vel­op­ment of an in­ter­gov­ern­men­tal model, through which the gov­ern­ments es­tab­lish an author­ity that re­ceives 100% of its fi­nanc­ing from In­dia for the con­struc­tion of projects. These projects will then be handed over to Druk Green Power Corp. Ltd. -- a whol­ly­owned en­tity of the Bhutan gov­ern­ment -- upon their com­ple­tion.

The 1,200-MW Pu­natsangchhu 1, 1,020MW Pu­natsangchhu 2 and 720-MW Mangdechhu are all al­ready un­der con­struc­tion as a re­sult of this model, while the 2,640-MW Kuri-Gon­gri, 2,560-MW Sankosh and 540-MW Amochhu are in de­vel­op­ment.

Mean­while, a num­ber of 50/50 joint ven­tures split be­tween Druk Green Power and a num­ber of In­dian part­ners are also on deck. In­cluded are the 180-MW Bu­nakha, 570-MW Wangchhu, 600MW Kho­longchhu and 770-MW Chamkharchu 1, which will be de­vel­oped with part­ners in­clud­ing NHPC Ltd., Satluj Jal Bidyut Nigam Ltd., Tehri Hy­dro De­vel­op­ment Corp. Ltd. and the Na­tional Ther­mal Power Corp.

Un­der terms of these joint ven­tures, roy­al­ties would be paid to Bhutan at a rate of 12% for 12 years, then 18% af­ter through­out a 30-year con­ces­sion pe­riod. The projects will be de­vel­oped with a 70:30 debt-eq­uity ra­tio in which the gov­ern­ment of In­dia and Druk each un­der­write a 15% share. How­ever, DGPC’s por­tion would come in the form of an In­dian grant.

Bhutan, via DGPC, has also un­der­taken the de­vel­op­ment of a num­ber of hy­dropower projects on its own as well, with plants in­clud­ing the 93-MW Tsi­b­jalum­chhu, 100-MW Gamri, 126-MW Da­gachhu, 208-MW Nikachhu, and 473-MW Ny­era Amari 1 and 2.

A tri­lat­eral, US$1.25 bil­lion deal that in­cludes Bhutan, Bangladesh and In­dia is also in the works. If all the coun­try’s pro­pos­als come to fruition, RMA said the an­tic­i­pated boom will cre­ate at least 6,500 jobs be­tween 2015 and 2020.

“The fo­cus on hy­dropower has been broad­ened to in­clude not just ef­forts to ac­cel­er­ate con­struc­tion of new hy­dropower plants, but also to en­hance the over­all ca­pac­ity in hy­dropower de­vel­op­ment,” the author­ity said.

The gov­ern­ment said Bhutan has an es­ti­mated 24,000 MW of eco­nom­i­cally fea­si­ble hydroelectric po­ten­tial, though just 1,600 MW -- or about 7% -- of that has been de­vel­oped.

Bhutan has com­mit­ted to cul­ti­vat­ing its hy­dro po­ten­tial in an en­vi­ron­men­tally re­spon­si­ble way, and is in fact a con­trib­u­tor to the gov­ern­ment’s “Gross Na­tional Hap­pi­ness” in­dex.

“This tra­di­tional rev­er­ence for na­ture has de­liv­ered us into the 20th Cen­tury with our en­vi­ron­ment still richly in­tact,” for­mer head of state Jigme Singye Wangchuck said. “We wish to con­tinue liv­ing in har­mony with na­ture and to pass on this her­itage to our fu­ture gen­er­a­tions.”

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