Tala Hy­dropower Plant to liq­ui­date its debt this year

It will con­trib­ute Nu 2,568.3mn an­nu­ally to the gov­ern­ment cof­fer there­after

Business Bhutan - - Front Page - Kr­ishna Ghal­ley from Phuentshol­ing

Tala Hy­dropower Plant in Ch­hukha will liq­ui­date its hy­dropower debt by this De­cem­ber.

The 1,020 Mega Watt (MW) hy­dropower plant was com­mis­sioned in 2006. By De­cem­ber, Nu 31,559.32mn will be paid back to the Gov­ern­ment of In­dia (GoI) by the time the loan is liq­ui­dated.

At 9% per annum in­ter­est rate, the gov­ern­ment had availed Nu 16,503.42mn dur­ing its con­struc­tion. It took 12 years for the project to liq­ui­date the loan.

Now, the hy­dropower plant

will be saving Nu 2,568.3mn an­nu­ally at Nu 2.12 cur­rent tar­iff rate paid by the In­dian gov­ern­ment.

“This will im­prove the cash flow for Druk Green Power Cor­po­ra­tion (DGPC) and Bhutan Power Cor­po­ra­tion (BPC). How­ever, the im­pact on the prof­itabil­ity is ex­pected to be very low due to sig­nif­i­cant re­duc­tion in the in­ter­est ex­pense due to re­pay­ment over the last 11 years,” said DGPC Man­ag­ing Di­rec­tor (MD), Dasho Ch­he­wang Rinzin.

Mean­while, the MD said that with the liq­ui­da­tion of loan, the earn­ings from the power plant will not be used for loan re­pay­ment for other hy­dropower projects as each project is taken up on the strength of its own fi­nan­cial vi­a­bil­ity. “Each project should earn suf­fi­cient rev­enues to ser­vice its own loan,” he said.

The rev­enues ac­cru­ing to Bhutan on com­mis­sion­ing of these projects un­der con­struc­tion will de­pend on the tar­iffs that are ne­go­ti­ated for sale of power to In­dia.

The im­ple­men­ta­tion of the project in­clud­ing cre­ation of ba­sic in­fras­truc­tural fa­cil­i­ties started in Oc­to­ber 1997. The main works of the project started in early 1999. The first unit of the project was com­mis­sioned on July 31, 2006 de­spite nu­mer­ous ad­verse ge­o­log­i­cal chal­lenges en­coun­tered. The ex­ten­sive dam­ages were caused by the un­prece­dented rains of 2000. The last unit was added on the bar on March 30, 2007.

In line with the bi­lat­eral agree­ment, the project author­ity handed over the project to the Royal Gov­ern­ment of Bhutan with ef­fect from April 1, 2009 af­ter two years of suc­cess­ful op­er­a­tion and main­te­nance. Sub­se­quently, the Tala Hy­dro­elec­tric Project was amal­ga­mated with the Druk Green with ef­fect from April 1, 2009 and was re­named the Tala Hy­dropower Plant.

The fi­nal cost of com­ple­tion of the project is Nu 41,258.545mn. The GoI has fully fi­nanced the project in the ra­tio of 60% grant and 40% loan re­payable in 12 equated an­nual in­stall­ments at a sim­ple in­ter­est rate of 9% per annum.

To­day, the coun­try’s hy­dropower debt stands at Nu 132.9bn from Nu 54mn in the 10th plan. Ly­onch­hen Dasho Tsh­er­ing Tob­gay dur­ing his visit to the Dzongkhag had men­tioned that the hy­dropower debt of the plant would be self liq­ui­dated af­ter its com­mis­sion­ing.

Also, the Mangdechhu project will be com­mis­sioned by the end of 2018.

The on­go­ing projects of Pu­natsangchhu I and II are ex­pected to take some more time for com­ple­tion, ac­cord­ing to Dasho Ch­he­wang Rinzin.

Mean­while, the es­tab­lish­ment of hy­dropower plant is also cred­ited to boost­ing lo­cal econ­omy. Apart from the fa­cil­i­ties pro­vided like schools and trans­porta­tion, the project has em­ployed the na­tive res­i­dents of the lo­cal­ity ac­cord­ing to their ca­pa­bil­i­ties, ac­cord­ing to Darla Gup Mil Ku­mar Mon­gar. “Lo­cal busi­nesses boomed in the gewog dur­ing the con­struc­tion pe­riod and peo­ple’s lifestyles have im­proved since then.”

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