The Druk Holding and Investment has suggested the Government to increase the revenue from DHI to the government in light of the decreasing revenue from the sale of electricity.
DHI Chairman Om Pradhan in a press conference yesterday said there is a need to increase revenue from DHI to the government and the 84 percent of the revenue which comes from the sale of electricity plays a big role.
“In the case of balance, we can go so far but we cannot make a substantial increase,” he said.
DHI has told the government that when it comes to increasing the par rates whether it is domestically or with the export of power, it is not in the hands of DHI. It is the two governments that negotiates and finalizes a rate and that is the rate BPC and DGPC charges to Government of India (GoI).
“We have informed the cabinet that we should start our negotiations with GoI to see if we can raise this rate. So the government is very aware of this and they are looking at the appropriate timing where this can be raised,” said the Chairman adding that it is not only from the trade point of view but the matter needs to be approached to GoI appropriately.
Also he said that when it comes to rural or other domestic consumption there is no problem if the government subsidizes the rate by keeping the electricity rates the lowest possible which is up to the government.
The other domestic consumption is for high-voltage industries. Just now, the industries can consume in a certain limit. “I hope the government will consider this. They are going by the Bhutan Electricity Act. Unless it is changed they cannot act otherwise. We are encouraging the government to look into this because we lose a lot of revenues,” he added.
The DHI CEO, Karma Yonten, said “DHI’s submission to the government was that with adequate increases in the electricity sector we can provide much higher dividends to the government”.
Auditors too pointed out that keeping in line with the Royal Charter and mandate, DHI has to build up reserves. To be able to invest from the company’s savings, it is necessary to build up reserves.
“If some action can be taken by the finance ministry to help build the reserves, ultimately these reserves belong to the government. Cabinet has directed the ministry to assess the situation and come up with some view on this particular issue,” said the DHI CEO.
In the last four years since it started its operation, DHI has been able to maintain a reserve of a billion Ngultrum.
“The amount of money retained in DHI is too small; it won’t be able to finance any big projects. It is because DHI doesn’t have the money with itself, partnerships are carried out,” he said.
The DHI CEO said that many projects which they can handle land up in partnerships because of financial constraints. “This is why we are requesting the government to help us build the reserves,” he said.
DHI contributes 95 to 97% revenue it gets to the government.