Dungsam to produce enough cement for the country

A revised completion date for Dungsam, the country’s biggest cement plant, is being finalized. Thereafter, Dungsam Cement Corporation Limited (DCCL) will produce 3000 tonne of clinker and 4130 tonne of cement per day.

Currently 221 employees work in the  DCCL but the cement company will soon see over 2000 employees who will generate INR for the country.

“With DCCL commenced, there will be more than sufficient cement for all the ongoing and upcoming Hydro projects in Bhutan,” said a DCCL official.

The new deadline for production of clinker will be on 15 December this year while cement production will be on 15 May 2013.

The project in Nganglam under Pemagatshel Dzongkhag was to start clinker production in July and cement production in October but was delayed.

The major reason was with earth works. During the course of execution of the project, it had to carry out additional works like plum concrete, reinforcement steel, additional steel plate works.

Another major challenge the project faced was the retention of laborers. “Despite all the incentives that was extended to the laborers, adequate workers could not be mobilized due to which the project implementation have been affected,” said a DCCL official.

Frequent strikes in Assam also added to the challenges. Around seven months were lost due to various strikes during the course of implementation of the project.

The recent ethnic problems in Assam have affected the retention and mobilization of laborers. Further it also affected the supply of steels and other items which are mostly procured from Kolkata.

Also the prolonged monsoon in the region added to the delay in the project. This year Nganglam experienced the highest rainfall of 7100mm.

“The Flood in the month of June and July 2012 also affected the project implementation schedule. The Project lost some of the equipments and accessories during the recent flood as well,” said the DCCL official.

With the delay in the project the cost of building Dungsam had also shot up by around Nu 2bn, making it a Nu 9bn project.

The project had borrowed Rs 2bn from Indian market at 13.5%interest, and Nu 2bn from a consortium of local financial institutions, to build the plant that will be thrice the size of Penden cement.

The Bhutanese government handed over the Dungsam Cement Project to DHI in March 2008. The government at the time of handing over received a grant of Nu 3000mn from the Indian government (GoI). Along with the GoI grant for the project, the Bhutanese government also passed on the full responsibility of project implementation to DHI including arranging the balance funds required to complete the project. With the total project cost estimated at Nu 7170mn, the funding gap was Nu 4100mn.

The debt is the largest (non-government) commercial borrowing by a project in Bhutan till date. And it is the largest local (Ngultrum) debt syndicated for a project till date at Nu 2100mn.

The Dungsam Cement is the first project to be jointly financed through a consortium of Bhutanese and Indian Lenders and also the first major project to be financed through the project finance modality with no-recourse to DHI and RGOB.