India’s Central Electricity Authority (CEA) earlier this year cleared the Detailed Project Report (DPR) for the 2,560 MW Sunkosh reservoir project.
This is significant as Indian officials until recently have parried questions on the status of the mega reservoir project saying that the DPR is still with the CEA.
Now that the CEA has cleared the DPR both the Bhutanese and Indian sides are technically supposed to sit for talks and start discussions on the implementation of the project.
However, this paper found that there has been proposal from India to discuss the Sunkosh project even after the clearing of the project.
The Bhutanese side might bring it up in one of the upcoming Empowered Joint Group (EJG) meeting but even this is not yet finalized.
For Bhutan of all the mega projects that two that it has been most interested in from the beginning has been Sunkosh and the bigger 2,640 MW Kuri Gongri reservoir project.
This is because the projects unlike the other run of the river systems would enable it to be more commercially viable by going for peaking power rates at certain times of the day as well as generating enough power in winter for local industries.
The storage capacity would also better enable it to be part of India’s energy mix with large capacities that can come online immediately to meet shortfall from other renewable sources like solar and wind.
However, it is precisely these two projects totaling more than half of the 10,000 MW commitment that have been put on the back burner by India.
The Indian side, from information available with The Bhutanese, since 2015 have been citing shortage of funds to do both the projects on the agreed Inter-governmental model.
In December 2015 the Joint Secretary North of the Ministry of External Affairs in a visit to Bhutan said that the Government of India (GoI) will not be able to consider the entire financing of Sunkosh and Kuri Gongri given the size of the investments required. Initial estimates showed that Sunkosh would require above Nu 200 bn while Kuri Gongri would require above Nu 150 bn.
He then said laid out some other options of which one was going the Joint Venture route whereby an Indian public company shares 50 percent ownership of the project for 30 years and another option was credit financing from India’s Export Import (EXIM) Bank which offers concessional interest rates.
A few months later in April 2016 a similar idea based on the Joint Secretary North’s was sounded out again this time by the Joint Secretary Hydro Archana Agarwal of the Ministry of Power. She also said that the estimated cost for the hydropower projects are enormous and GoI is not in a position to inject the amount which is why other options like Joint Venture and etc were suggested.
The above two Joint Secretaries are two of the three Indian representatives on the Empowered Joint Group that oversees the 10,000 MW by 2020 project. Bhutan has four representatives on the Group with the Minister for Economic Affairs as the Chairman.
The Bhutanese side, both officially and unofficially have clearly stated that both the governments have already identified Sunkosh and Kuri Gongri as Inter Governmental (IG) mode projects and not JV projects.
It has been learnt that the Bhutanese side is still pressing for the IG model for the projects but all of this has been complicated by India’s issuance of the Cross Border Trade in Electricity (CBTE) guidelines which restricts the access of Bhutanese power to the Indian market and also aims to keep tariff rates low among many other restrictions.
This CBTE also violates the JV agreement between the two projects for the four JV’s and so Bhutan has declined to sign the Concessional Agreement for the JVs to go ahead.
A new factor of India being power surplus from this fiscal year of 2017-18 also has to be factored in.