State of Bhutan’s Hy­dropower Projects

All of that time for gar­den­ing, cy­cling, cir­cum­am­bu­lat­ing, and pros­trat­ing may not be enough

Business Bhutan - - Opinion - Yeshey Dorji The writer is a mem­ber of the Ro­tary Club and an avid blog­ger and photographer

Ac­cord­ing to the re­cent pub­lic dec­la­ra­tion made by our Eco­nomic Af­fairs Min­is­ter Ly­onpo Leki Dorji, Bhutan has no other eggs, other than the hy­dro-power egg. Thus, it would seem like Bhutan’s hy­dropower story is all about the egg and the bas­ket. If so, it is im­por­tant to take time off to ex­am­ine how re­ally bank­able our hy­dro-power projects are. And, while bring­ing per­spec­tive to our hy­dro-power projects, by ne­ces­sity, we must dwell on our two largest on­go­ing projects – the Pu­natsangchhu Hy­dro Elec­tric Projects I & II. An­other of Bhutan’s large hy­dro-power projects – the 720 MW Mangdechhu Hy­dro­elec­tric Project Au­thor­ity de­serves men­tion – but for now I will limit my­self to PHEP I & II.

Our hy­dro-power po­ten­tial

We be­lieve we have 30,000 MW hy­dro-power po­ten­tial of which 23,760 MW is said to be eco­nom­i­cally fea­si­ble.

How many of you be­lieve that this is still true and valid, in to­day’s con­text? The as­sess­ments were made about 3-4 decades back. And, in all like­li­hood, the as­sess­ments would have been made by WAPCOS, the prin­ci­pal Con­sul­tants to Bhutan’s dis­as­trous hy­dro-power projects.

Since the as­sess­ments were made, the world has seen se­vere cli­mate change brought on by global warm­ing. Our re­gion is said to be ex­pe­ri­enc­ing warm­ing rates that is 1.5 times the global av­er­age, caus­ing huge glacial melt and al­ter­ing rain­fall pat­terns, which al­ter wa­ter-flows into our rivers. Be­cause of this al­tered sce­nario, there is a need for a fresh study to de­ter­mine our real po­ten­tial, based on the lat­est cli­mate data. May be our stated po­ten­tial could be whole lot of air and not wa­ter.

Our claim as a net ex­porter of elec­tric­ity

Bhutan is sup­posed to be a net ex­porter of elec­tric­ity, ex­port­ing over 1,500 MW of elec­tric­ity to In­dia last year. But we are en­ergy re­liant; in­fact, we are elec­tric­ity re­liant. We have to im­port elec­tric­ity from In­dia dur­ing the win­ter months, at a much higher price than at which we ex­ported to them. The gov­ern­ment will tell you that this is in the na­ture of na­ture. It may be so, but we know that this is some­thing that can be eas­ily cor­rected. But we can’t be both­ered.

Bhutanese CAN­NOT af­ford our own elec­tric­ity

Even stranger, for a coun­try that lists elec­tric­ity as an ex­portable sur­plus, its cit­i­zens find elec­tric­ity too ex­pen­sive for use as an en­ergy source for cook­ing and heat­ing homes. Not out of choice but driven by com­pul­sion, Bhutanese peo­ple waste many hours of their pro­duc­tive lives - queu­ing up at the fuel sta­tions, try­ing to buy LPG and kerosene, for cook­ing and heat­ing their homes. And what does the gov­ern­ment do? In­stead of solv­ing the prob­lem, they at­tempt to man­age and bring some sem­blance of or­der to the throng that form at the fuel pumps. Tragic.

Bhutan is un­pre­pared for GLOFs and earth­quakes

The stor­age dams of the PHEP I & II, if they ever get built, will cre­ate huge wa­ter bod­ies that could al­ter weather pat­terns and trig­ger ma­jor earth­quakes. And yet, our Dis­as­ter Man­age­ment Depart­ment tells us that we are un­pre­pared, in the event of a large earth­quake. Bhutan is lo­cated in a seis­mi­cally haz­ardous zone and the Great Hi­malayan Earth­quake in our part of the world is said to be im­mi­nent. In ad­di­tion, GLOFs are a clear and present dan­ger, given the rate of ice melt that is recorded in our part of the Hi­malayan re­gion. Bhutan has close to 2,800 lakes of which 25 are po­ten­tial GLOFs.

Even if we dis­re­gard all of the above, some­thing that we can­not ig­nore is the fact that the PHEP I & II sits bang in the mid­dle of a seis­mi­cally high haz­ard zone.

How plau­si­ble is it that the Chair­men of the Board and the Board Mem­bers of the past and present PHEP I & II Board did not know of the pre­car­i­ous­ness of these projects’ lo­ca­tion? There should be no doubt in any­body’s mind why these projects keep en­coun­ter­ing all man­ners of “ge­o­log­i­cal sur­prises”.

Un­bri­dled project cost es­ca­la­tion

From the orig­i­nal cost es­ti­mate of Nu.35.00 and Nu.37.00 bil­lion, the fi­nal cost of con­struc­tion of the PHEP I & II is likely to es­ca­late by 400500% of their orig­i­nal es­ti­mate. 70% of the fi­nal cost will have to be borne by the Bhutanese peo­ple in the form of loans – at a lu­di­crous in­ter­est rate of 10% per an­num. And yet the gov­ern­ment and the project au­thor­i­ties will tell you that the loans are self-liq­ui­dat­ing – as if we are in the busi­ness of liq­ui­dat­ing loans.

As­tro­nom­i­cal per unit cost of gen­er­a­tion

If and when the con­struc­tion of these dis­as­ters end and gen­er­a­tion starts, we will find that their cost of gen­er­a­tion would have shot through the roof and into the strato­sphere. As of last year, it is said that the cost of gen­er­a­tion at the PHEP I & II has al­ready crossed Nu.4.00 per unit. The project com­ple­tion date of these projects have yet again been pushed back to 2019 and 2022. You and I know that these dates will yet again be pushed back. This means the cost of gen­er­a­tion will be some­where in the re­gion of Nu.9.00 – Nu.10.00 per unit, if not more. As against that, con­sider that our Da­gachhu Project is said to be hav­ing a hard time sell­ing their elec­tric­ity at Nu.2.90 in the In­dian mar­ket. But the gov­ern­ment and the Project au­thor­i­ties will tell you that the ar­range­ment is “COST+” – im­ply­ing that cost is not an is­sue be­cause we will get paid at the rate of COST+. We will have to watch and see if that will be true.

Plung­ing cost of gen­er­a­tion in our only mar­ket - In­dia

In a sin­gle year, the bid for so­lar power in In­dia fell from Nu.4.34 to Nu. 2.62 – a drop of 40%. Given that there is a strong push for re­new­able en­ergy in In­dia, the pho­to­voltaic and wind tur­bine tech­nolo­gies are bound to make huge strides. As a re­sult, it is most likely that the cost of gen­er­a­tion in In­dia will fall far be­low Nu.2.00 – by the time our dis­as­trous PHEP I & II come on stream. This is the rea­son why In­dia is now slowly shift­ing their fo­cus from ther­mal and hy­dro plants to re­new­able en­ergy - be­cause this sec­tor is all set to take on the lead­er­ship role.

There are a few hun­dred things I can talk about on the sad state of af­fairs sur­round­ing our hy­dro-power projects. But I won’t go into them since most of them have been touched upon in my var­i­ous ear­lier posts. For now let us shift fo­cus to what is hap­pen­ing in In­dia, our ex­tended home mar­ket for ev­ery­thing, but most im­por­tantly, our sole mar­ket for our hy­dro-power egg.

Our Hon’ble Eco­nomic Af­fairs Min­is­ter says that we have no other eggs – other than our hy­dro-power egg. He sees no other op­tion, than to strive to put our most pre­ferred “egg” into the In­dian egg bas­ket. So let us do a re­alty check on how bank­able our hy­dro-power egg is, and how spa­cious our In­dian egg bas­ket re­ally is.

Newspapers in English

Newspapers from Bhutan

© PressReader. All rights reserved.