10,000 MW by 2020 given a quiet burial with P I and II as the last projects

Indian team not for the barrage solution proposed by Bhutan for P 1

The Indian Power Secretary Alok Kumar and his team was in Bhutan on an official visit from 29 October to 1 November during which he met with the Prime Minister Dasho Dr Lotay Tshering and had discussions with his counterpart the Secretary of the Minister of Economic Affairs, Karma Tshering.

In the meeting the 10,000 MW by 2020 list was discussed and both sides agreed that the earlier model of Inter Governmental (IG) projects are no more tenable now as so much has changed in the energy sector.

An official on the condition of anonymity said, “The earlier agreement of this many IGs and this many Joint Ventures is irrelevant and both sides have agreed to that. IGs will not happen.”

The official also said that the 2,560 MW Sunkosh reservoir project which Bhutan had been pushing for the last few years but was stuck due to project modality and funding issues will also not be happening as it comes under the 10,000 MW list.

The 1200 MW Punatsangchu I and 1020 MW Punatsangchu II are the last two projects.

“If we want to do any projects in the future probably we can have a project specific model. The 10,000 MW list is not relevant,” said the official.

The 10,000 MW decision of sorts is more an acceptance of the ground realities than anything else.

When the 10,000 MW by 2020 was first agreed to in 2008, India had almost an unlimited need for power, but since then there have been huge thermal, gas, solar, wind and hydro additions to generating power in India, making India power self sufficient.

Another development is that with so much power being generated and especially with the entry of solar and wind energy the cost of renewable energy has drastically dropped in India which increasingly makes hydropower tariff rates less competitive.

Apart from this, the massive cost overruns, delays and a weak right bank in the P I project only added to the jitters for both sides.

There was also lack of agreement on the future modality of executing projects in Bhutan. The Bhutanese side wanted to have a more professional, accountable and international team with a larger Bhutanese role to avoid past mistakes, while the Indian side in the case of Sunkosh wanted it to be handed over to an Indian PSU to be built and then handed over to Bhutan with no Bhutanese role in the construction phase.

The recent meeting was only an acknowledgement of the reality of the changed power scenario and dynamics.

The acknowledgement helps the Indian side as the projects are no longer an obligation for them, and it also helps the Bhutanese side as the projects are not in any list and are so free for potential future development.

Of the 10 projects agreed to in the 10,000 MW by 2020 only the 720 MW Mangdechu project has been completed with P II under construction and P I stuck over the dam versus barrage proposal.

The projects that are not happening are the 2,560 MW Sunkosh Reservoir, 2,640 MW Kuri Gongri Reservoir, 180 MW Bunakha Reservoir, 600 MW Wangchu, 670 MW Chamkarchu, 620 MW Amochu (cancelled) and 600 MW Kholongchu.

Both sides more or less agreed that henceforth they must concentrate on and conclude whatever projects are at hand which is P I and II.

“For the future project we have to be very careful and we can only go with project basis,” said the official.

 While talking about the P I project there was some bad new for the Bhutanese side’s proposal for a barrage instead of the current dam site which the Bhutanese side is saying is unsafe after continuous slides, movement and two international studies.

After the Bhutanese side had given a barrage proposal to the Indian side and Central Water Commission of India, which is the civil works consultant, the India side constituted a team from their side who examined the barrage proposal and rejected it.

Now with the Indian side insisting on the current dam site, and the Bhutanese side on the barrage, both sides decided to form a technical group of 8 members from both countries to find a solution to this and submit a report within the next three months.

The stakes are high for the Bhutanese side as P 1 has already spent Nu 82 bn of which 60 percent is loan and the current dam site spent Nu 24 bn of which around half the amount worth of construction will have to be abandoned as studies show it is not safe.

For Bhutan, building on the current site will be dangerous in the future given how the right bank has always been sliding and defied several attempts by CWC and others to stabilize it.

A separate Nu 4.5 bn had been spent since 2013 on the right bank when the first slide happened in stabilization and strengthening measures under the advice of CWC, but it all failed to prevent the movement in the right bank with slides again in August 2016 and in January 2019.

After the 2019 January slide the CWC in October and December 2019 recommended another round of strengthening measures claiming that the right bank is safe enough to build the dam.

The Bhutanese side which was not fully convinced asked another Indian government company National Hydro Power Corporation (NHPC) to do a review of the CWC proposal and NHPC disagreed with the CWC assessment and said it is not safe enough to build a dam.

The NHPC instead recommended to build a smaller structure in the form of a barrage 820 meters upstream of the current site.

When the project authority asked to two companies with different findings to reconcile their contradictory findings they came back after a while and said it is safe enough to build the dam.

However, questions were raised on how the NHPC drastically changed its own stance and data to fit in with the CWC.

The government through DGPC hired a foreign company to do a review of the review which also showed the current site to be unsafe with a recommendation for a barrage.

If the India side insists on the dam site and Bhutan is not confident of its safety, then the next big literally billion-dollar question will be on what will happen to the Nu 82 bn invested so far.

The third issue discussed was the 600 MW Kholongchu project which is no longer a JV project.

The Bhutanese side was hoping that Kholongchu project would be done as an IG project with an improved modality but while no decision was made, an initial offer from the India side was to handover the project to another Indian PSU under the Build Own Operate and Transfer model (BOOT) so that the project would be built by the PSU, owned and operated by them for 30 years and then transferred back to Bhutan after that.

To accept a proposal like this would be jumping from the JV frying pan into the BOOT fire and so it did not happen.

The official said, “The Joint Venture was not going well so the closure of JV was amicably agreed and so now the way forward must be how to take over the infrastructure, resolve the liabilities as is where is basis and so DGPC and SJVNL will discuss the way forward.”

The official when asked about the Indian side’s rejection of the improved IG model for Kholongchu said, “They don’t want to do any more Inter Governmental (IG) projects and that is for sure. They also cannot keep on investing money and so IG is not their choice.”

With the JV closed and the an improved IG not possible the only pathway left for the project is for Bhutan to do it by itself after looking for some international financing for the 600 MW project.

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