Indian government also grants approval to four JV project agreements
The Indian PM Manmohan Singh’s assurance to the Bhutanese PM Lyonchhen Tshering Tobgay of releasing an additional Nu 17.65 bn for the Punatsangchu 1 project will ensure that work can go on in full swing in the project.
This is because the proj¬ect was suffering from a fund shortage as it has already spent the earlier sanctioned amount of Nu 35 bn as the cost of the project at 2006 rates.
The Minister for Economic Affairs Lyonpo Norbu Wang¬chuk said, “Without this 17.65 bn the project was running short of funds and some work had to be scaled down. The project also owed contractors money for works already com¬pleted but which could not be paid. Even the strengthening measures at the slide place could not be fully carried out.”
“Now with the 17.65 bn approved by the Indian PM the works can go ahead in full swing, the strengthening measures can be done and all equipments can be put at the construction site,” added the MoEA Minister.
The Minister explained that Nu 35 bn was the sanc¬tioned cost of the project at 2006 inflation rates and esti¬mates. He said that the addi¬tional Nu 17.65 bn was the cost escalation of the project up to 2014. This would mean that the total cost of the project till 2014 would be 52.65 bn.
This combined with the ad¬ditional works will push the project cost to around Nu 94 bn by its estimated com-pletion date of around 2018.
Lyonpo Norbu Wangchuk said, “The next step will be to discuss the total completion cost of Nu 94 bn and other ad¬ditional works and get it ap¬proved.”
Meanwhile in the same bilateral meeting on the side-lines of the BIMSTEC summit in Myanmar the Indian PM told Lyonchhen that the GoI has approved the draft In¬tergovernmental Agreement between Bhutan and India concerning the development of Joint Venture Hydropower Projects. The draft Agreement is expected to be signed soon.
Under the Agreement, four projects have been identi-fied: the Kholongchhu proj-ect (600MW), the Wangchhu (570 MW), the Chamkharch-hu (770 MW) and Bunakha (180 MW). Work on the Kholongchhu Project can start as soon as the Intergov¬ernmental Joint Venture is signed between the two coun¬tries.
Lyonpo Norbu Wangchuk explained that the JV agree-ment would mean that Bhu-tan’s Druk Green Power Cor¬poration and Indian Public Sector Undertakings (PSUs) would own 50 percent of the project each. Of the 100 per-cent financing of the project 70 percent loan would be raised by the project from the market. The remaining 30 percent would be equity that had to be raised at 15 percent by DGPC and 15 percent by the Indian PSU. The GoI has agreed to fund 15 percent of Bhutan’s equity share as a grant.