First draft of Integrated Project Development Report to be ready by mid May 2016 as DHI works to get international funding
There is good news for both Bhutanese residents residing in Jaigaon and Bhutan’s business community as the Amochu Land Reclamation and Township Project (ALRTP) is expected to take off from early 2017 onwards. The project has an eight year period with three different phases.
The first draft of the Integrated Detailed Project Report (IDPR) done by an Indian consultancy firm HCP Design, Planning and Management Pvt Limited will be ready by mid May this year.
The report, for the first time, will give not only technical information like the land layout, geology, flood control measures etc, but will also give information on how to make the project financially viable based on market studies and also give options on land usage.
Druk Holding and Investments (DHI) is also getting positive signals from the Asian Development Bank which is willing to finance a part of the project. DHI is also in the process of looking for funds from other international funding agencies like the World Bank etc.
DHI Infra CEO, Dorji Namgay said that in 2015 the cabinet had not only approved the project but agreed to give sovereign guarantee for any external borrowings for the project by DHI including in foreign currency.
Early on there were some concerns from across the border if the flood protection works and the project could lead to flooding or affect river flow downstream on the Indian side. One particular concern was any possible impact on the Jaldapara Wildlife Sanctuary in West Bengal. The issues were brought out a few years ago during one of the Border Coordination meetings between the two sides.
Here too, reports already show that flooding caused by the project is out of the question as it is not a water storage project. The environmental studies also showed no change in the river velocity and sediment transportation even over a long period of time. There were also no morphological or other permanent changes in the river.
During her visit the West Bengal Chief Minister also expressed support for the project. This is significant as the Indian central government in the past said that on environmental issues, if the state government had no issues there would be no issues from the Central government.
A potentially vexing issue was also of 121 private plots coming to around 70 acres within the project area. The CEO said that here too a solution has been found as the National Land Commission has approved the resettlement of 27 plots which fell in the flood area. The NLC also approved a separate Local Area plan for the 70 acres.
The CEO said that even excluding these 70 acres the Amochu project area had increased from the earlier estimate of 865 acres to now 1,248 acres.
These latest developments show the ball is finally rolling on the much talked about but also delayed Amochu project.
The Amochu project first came up in 2003 but a major issue that came in between was the Amochu hydropower project and its potential impact on the project. With the hydropower project pretty much shelved due to cross border security issues the entire project has got a new lease of life.
The entire Amochu project is expected to cost a total of Nu 10 bn of which 3 bn will be equity put in by DHI and the rest 7 bn will be taken as loans.
The DHI Infra CEO said that this would be a fully DHI owned project and there are no plans to bring in any FDI investors. The land would, therefore, be owned by the government company.
The CEO explained that earlier the government with support from DANIDA had carried out a study on flood control along the Amochu river.
He said the latest IDPR, combined a detailed study on flood control and land reclamation and also the Amochu Township itself.
The same consultancy group is involved in the mega project of Sabarmati river front development project in the Indian state of Gujarat in India. The consultancy group started its work in November 2015 and is expected to give the final report in September 2016.
However, the CEO also pointed out some key challenges for the project. The first he said was that under current laws DHI can only give a land lease from the project site for a period of 30 years.
“It may not be good enough for investors to come and spend huge amounts of money on infrastructure if the lease is only for 30 years,” said the CEO. He said that something should be done about it.
Another potential challenge is on what types of activities and land usage would be allowed in the project.
“If there are too many restrictions then the occupancy rate will be low,” he added.
The biggest challenge of all will be to ensure that it is a financially viable project given the huge investment required. He said that Phuntsholing at 450 acres took 30 years to come up, but this project which is around three times bigger is expected to come up within the next eight years.
Here, the CEO said that the consultant will do detailed market studies which will involve not only studying the market but also talking to potential clients, local businesses, businesses outside Bhutan, residents, government agencies, etc to ensure financial viability.
He said that an important component of this part will also be doing studies and finding out what rents can be applied. A key to the success of the project will be in attracting foreign investment into the project sites.
The CEO said that at the same time the project was not an entirely commercial venture but also a social and national one as the main aim is to provide relief to a crowded Phuntsholing and the 5,671 Bhutanese living across the border in Jaigaon.
He said that there would be low income housing for people built by the National Housing Development Corporation and National Pension Provident Fund.
The Township may have shopping malls, recreational and fun activities around water, schools, colleges, corporate offices, government offices, hotels and resorts, residential areas etc according to the CEO.
It will also have space for non polluting industries like small scale industries, IT, assembly lines, etc.
Given that Phuntsholing is already Bhutan’s main trading hub the project is expected to further enhance its trading capacity by providing more space and opportunities for trade.