Bhutan’s first Private Hydropower Construction Company registers with MoEA

A consortium of Bhutanese contractors has registered itself as Bhutan’s very own private hydropower construction company with the office of the Registrar under Ministry of Economic Affairs (MOEA) as a Public Limited Company on 14th March.

The company would be called as “Bhutan Energy and Infrastructure Limited”. The main aim of the company is to allow Bhutanese contractors to participate in the construction of hydro projects.

The company aims to enhance national engineering capacity and professionalism in hydropower industry and build quality and cost consistency in hydropower industry.

The Chairman of the new Public Limited Company is Ugen Tshechup Dorji who is also the BCCI President. The acting CEO is Gopal Waiba a private contractor.

Gopal Waiba said, “The main motive behind establishing this Company is to become a lucrative national revenue generator and a truly national economic building endeavor.”

The Chairman of the company said that the private sector appreciates having reputable companies from India that will help government to fulfill their goal of 10,000 MW by 2020.

“But when will we see local construction companies getting involved in the projects. We should not wait till it is too late and when we have exhausted all the hydro potential within the country to give our locals an opportunity,” he said.

He said if government has the will, then it will definitely find the means and ways to involve local construction companies to be a part of developing the Nation involving the use Bhutan’s own Natural resources.

He pointed out that DGPC took up the responsibility to execute Hydropower Projects and they have been successful in building up their human resources and capacity to prepare DPR’s and executes projects.

“They are a Bhutanese government Company and the opportunity was provided by the government for them to develop. They have proved themselves capable Bhutanese Company so why would it be different for a Private Bhutanese Company if given the same opportunity. Equality is about Equal Opportunity,” he added.

The initial investment for the company is Nu 37.7 mn whereby every promoter should make a minimum contribution of Nu 500,000 per head.

“It was as per the assessment to take up the project but we have to see how the government provides us with the opportunity,” said the Gopal Waiba.

Initial investment is mainly for Phase I; which includes the setting up the company, conducting feasibility studies and constructing roads and bridges and other related survey.

While Phase II includes purchasing equipments and constructing hydropower; escalating to sum of Nu 2 to 4 billion.

Till date the government has been giving Indian companies an opportunity to conduct feasibility survey. Therefore the new company is waiting for  permission from the government to let them also conduct pre-feasibility surveys on four sites that they have targeted.

If the company finds a site above 25 MW then they will request government to allow the project to be done under a FDI model.

Even if the study is done by the private company, they will undergo bidding process so as to give equal opportunity to other bidders.

“One objective of setting up this company is to prevent people from investing on depreciating properties; such as buildings and proceed towards a ‘saving culture’,” said Gopal Waiba.

He said the hydropower construction company can earn foreign currency which has a good impact for the whole nation and also provides employment opportunities.

Although the consortium is happy about getting registered with the MOEA they are unsatisfied with the government for the delay in the registering process as they had hoped to register by February 2012.  On Earlier on 20th February 2012, out of 35 promoters who are all contractors 17 of them gathered for a meeting and registered themselves for the company

Earlier several requests were made by contractors to the government to involve them in the Punatsangchu II and Mangdechu projects, in any way possible, so that contractors gain experience but with no results.

After the government’s reluctance to allow Bhutanese contractors to work at mega project sites, the company has decided to start by working on smaller hydro projects.

“Small projects which constitute one to 25 megawatts are actually reserved for national firms only,” said Gopal Waiba. He added that Private Company is aiming to get entry into the medium and small hydro projects.

As per the provision in sustainable Hydropower policy, there are four categories for Hydropower projects.  Project above 1000 MW is known as IG model; undertake by Indian Government and Royal government of Bhutan. Joint venture Model which takes 1000-150 MW is done by Druk Green Power Corporation (DGPC) and Public Sector Undertaker (PSU) of India.

FDI model is the third category, which takes 150-25 MW. In this model national firm should hold 26 percent of equity. While the last category takes 25-1 MW projects which is purely for national firms.

However the core promoters said they are hopeful that this time government will provide them with opportunities. Since they believe that the consortium company is by the Bhutanese, for the Bhutanese and to the Bhutanese.





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One comment

  1. I think this is a very good start. We need to be self sustainable in every way. Building capacity to construct Hydro projects internally will in the future enable us to build these massive projects with more funds remaining in the country compared to today.

    On the flip side though we have to ensure that the success of the projects come first. After all the country cannot afford to have a failed major project just so that we can build capability in-house. I think the govt so far has been outsourcing only indirect works to our local contractors which is a good start. Now the officials in charge need to look at the projects in more detail to identify other things that are more closely related with the Hydro project itself to be outsourced to local contractors. I believe there is a ton of work just excavating soil out of the dam sites. This could easily be given to local contractors. After all it doesn’t take a rocket scientist to remove dirt.

    Since we are also building tunnels etc. which require massive concrete work maybe we should allow our local firms to build small/medium units that can build the prefab concrete slabs of course with strict quality checks. Similarly there are many items that can be locally produced. Why doesn’t the authorities look at opportunities to use local materials. This would generate a lot of local employment and at the same time significantly stem the outflow of Rupee. Quality is definitely an issue but if there is a will there is a way. We can always have quality checks in place to ensure that we get the right product for the job. These checks will also be a good way to verify what is coming in from India. I believe it is quite easy to get fake goods with the standard marks from the big companies in India but are actually being produced by small Industries with little to no quality checks which are no better if not worse than our own local industries. At this rate our GDP will sky rocket but the actual benefit will mainly accrue to India and not Bhutan. At the same time because of significant increase in GDP our per capita drastically increases and thus all our donors are already starting to leave the country.

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