Phuentsholing town

ADB approves Nu 1.6 bn grant & 1.9 bn soft loan for flood protection & 162.88 acres of new township for Phuentsholing

The Board of Directors of the Asian Development Bank (ADB) on 6th June approved a loan and grant package totaling USD 53 million or Nu 3.63 bn (USD 1 = Nu 68.87) for a 4.5 km flood protection wall and creation of 161.88 acres of land for the cramped Phuentsholing town.

The total cost of the project is $63 million, of which USD 24.26 mn or 1.670 bn is a grant from ADB’s Asian Development Fund, which supports its lower income developing member countries, and USD 28.74 mn or Nu 1.960 is a concessional loan. The government will contribute USD 10 mn or Nu 688 mn toward the project, which is due for completion around the end of June 2021.

After securing the additional 162.88 acres, the project will then start developing the area as an extension of the current Phuentsholing town with road, water, electricity, foothpath, landscaping, wastewater collection and treatment systems, power and telecommunications, and solid waste management.

The current 450 acre Phuentsholing handles around 80 percent of Bhutan’s trade and has around 25,000 people living in it not counting the Bhutanese who have to stay across the border due to lack of land and accommodation.

The Zone A area is considered the most urgent and important part of the entire and larger Amochu project because it involves flood protection of the left bank of the Amochu river which is urgently needed to protect the current Phuentsholing town.

The outer reaches of the town experienced flooding during the 2017 monsoons as the Amochu breached its banks and swallowed some structures, vehicles and equipment.

“Erosion and annual flooding are holding back the growth of Phuentsholing, which is one of a number of Bhutan cities increasingly experiencing water-related disasters such as landslides and floods,” said ADB Senior Water Resources Specialist Mr. Lance Gore in a ADB release. “By addressing this issue, the project is expected to not only develop a sustainable and effective model for township management but provide opportunities for investment, create jobs, and relieve existing housing pressures.”

Given its importance, the government in its Eleventh Five Year Plan, 2014–2018, identified Phuentsholing as one of the country’s potential growth centers that can take advantage of a location on the Indian border to become an economic hub for trade, transport, storage, and manufacturing.

Land scarcity is holding back growth, since the city is confined by steep hills, the Amochhu River, and international borders. It is also significantly exposed to landslides caused by rain and earthquakes. Flash flooding triggered by monsoon rains occurs more frequently due to dense development, the loss of natural ground cover, and climate change.

Since 2002, the government has been addressing these issues by constructing flood and erosion defenses along the river and expanding the city away from mountain slopes onto flat riverside land for residential, commercial, and recreational use.

Beyond the infrastructure investments, the project will build capacity to improve the urban land management and service delivery of the municipal government, while streamlining coordination between the new township and Phuentsholing municipality.

The project will be implemented by the Construction Development Corporation of Bhutan under DHI.

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