BKP urges government to rethink Hydropower Development

The Bhutan Kuen-Nyam (BKP) in a press release asked the government to reconsider the impacts of hydropower projects and also explore other economic alternatives before going ahead with more projects.

The release said that while hydropower would remain an important component of the economy, Bhutanese should think about the further development of hydropower – at great cost and risks to its citizens and ecosystem for pursuit of revenues, about which concerns must be confronted in terms of overdependence on one source and a single buyer.

It asked the people to consider a staggered approach and learn from past experiences on all aspects of equitable social development, employment, macroeconomics, political economy and the environment.

BKP asked how have the Bhutanese people and the private sector benefitted from the availability cheaphydropower in the country so far. “For instance, job creation for our youth, business development for the private sector, markets and townships for our dzongkhags,” said the release.

The party suggested that the hydropower development agreements should have policies and terms to create jobs for youth not necessarily at production sites or during the construction period but as an overall development agenda to develop communities running a vibrant local economy as a spill over effect along the valley floors.

BKP asked with cheap power available in the country, has the development of Bhutanese owned industries in the southern border gained momentum on grounds of comparative advantage with potentials to create more jobs for the unemployed and additional revenues for the government.

The release questioned to what degree Bhutan is prepared to payback debt that will amount to Nu. 150.577 bn by the end of 2016.

At the end of the 11th five-year plan the GDP to debt ratio is estimated to a record high of 111% with increasing disbursements of PHPA I & II and Mangdechu not to mention Nikha Chu and Kholong Chu projects according to the release

“With 80% of loans accrued to hydropower, the government must be real sure that financial projections and business models (financing schemes) will yield correct outcomes because past projections have not always been true,” said the release.

The release said that Bhutan must take valuable lessons from PHPA cost deviations from the actual estimates. “Further, to what degree can we sustain the loans if water levels dropped, or an unexpected GLOF occurred altering river flows and damaging dams,” asked BKP.

BKP said that with the export price per unit fixed, tax and non-tax revenues from hydropower are also capped resulting in a downward trend in share of total revenues as the economy grows.

The party said it is time for the country to pause and rethink whether it makes more sense to explore other options for revenue generation, job creation and overall development that will allow moving in the right direction pursuing sustainable and inclusive development bringing on board the entire country.

“We must define whether the country’s resource is water alone or is it our people,” asked the release.

According to the party Bhutan should not have any urgency to develop new hydropower projects but rather pause to undertake some reflection before blocking another river. “Instead prudent borrowings should be invested in sustainable job creation and private sector development, because ultimately it is the people of Bhutan who will have to pay off the liabilities and not any government,” said the party.

It pointed out that the high growth rates driven by the hydropower sector without a commensurate increase in gainful employment for a rapidly growing and educated labor force, is bound to pose significant macroeconomic challenges.

The party questioned that with the 11th five-year plan working towards self-reliance, and with increasing government borrowings, is Bhutan moving in the right direction of self-reliance or is Bhutan becoming more reliant.

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