The original 10,000 MW by 2020 list of projects and their status

Indian Power Secretary to visit Bhutan to discuss future of Kholongchu and 10,000 MW by 2020

With the 600 MW Kholongchu project being closed down as a Joint Venture project there are now questions over its future.

Another matter long due for discussion is on what will happen to the 10,000 MW by 2020 agreement signed between the two countries given that most of the projects on the list are not happening

To discuss the above two matters, Bhutan will be expecting an important visitor in the form of the Power Secretary of India, Alok Kumar. Though the dates are not confirmed yet, the visit is expected to happen this month.

Minister for Economic Affairs Lyonpo Loknath Sharma said that since the JV model was not working for Kholongchu it is being closed down as the current status quo was only leading to more expenditure. He said the management is reducing the number of employees and closing down the offices and guest houses.

The JV project could not happen due to the JV partner SJVN not agreeing to give 20% of the dam and power house civil works to CDCL as agreed before, management control fully under SJVN and the board also being in a stalemate due to equal membership which is not allowed by the Companies Act.

He, however, said that this does not mean the project is being abandoned as a lot of money (around Nu 5 bn) has already been spent, there are people’s expectations and the project would bring socio-economic benefits.

He, however, said that the Kholongchu lesson has been that there will be no more JV projects hereafter (considering that Kholongchu was supposed to be the template project for the other three JVs.)

He said this is a good time to review the existing models.

Lyonpo said that given that the Kholongchu project cannot happen as a JV project he said there is a possibility to take it up as an Inter-Governmental (IG) project between the two countries, but with certain reforms and changes. 

Another matter to be discussed is reviewing the 10,000 MW by 2020 and the umbrella agreement for it as well as the models for doing projects.

Lyonpo said that the hydropower cooperation between Bhutan and India have been long standing and mutually beneficial. He said for example the Mangdechu project was really helpful for Bhutan during the last two years of COVID-19 pandemic due to the revenue it generated.

Lyonpo said that at the same time there are a lot of changes in the renewable energy market with them becoming cheaper and so by comparison hydropower is becoming expensive, and so an issue in the future would be the rate of power and the market.

 A senior official said that since most of the 10,000 MW projects are not happening the review may also be a way to remove obligations of the projects by taking them off the list.

The senior official said the other possibility is that if Bhutan can raise its own financing then it can build some projects and sell the power to India. The official said that future projects should also lead to capacity building in Bhutan.

The official said there are good projects like Sunkosh reservoir, Bunakha reservoir, Nyera Amri etc which are good projects and can be done at one time or the other.

He said the energy scenario is changing for hydropower and so the focus for now will be to complete P I and P II which are projects in hand.

He said Bhutan’s own energy requirement is firm energy in winter of another 200 to 300 MW and for that there are mini hydro projects being taken up as well as solar projects of around 300 MW being planned at seven sites which include Bumthang, Dagana, Education City site, Wangdue etc.

He said a 17.3 MW solar plant is being set up in Sephu.

He said land is not an issue as fallow or sloping land will be used which cannot be used for agriculture or settlements.

The official said that if the 10,000 MW by 2020 is not possible then it is better to admit it and make it official. He said that there is a similar thinking on the Indian side too.

A second official said that one of the discussions would be to do future bilateral projects under an improved system.

This official said that even IG projects have faced problems and delays and so the suggestion is a better model with an improved structure where people are held accountable.

He said, “People should not be put there just to appoint someone, but the best and most capable person should be put there and if they cannot fulfill their responsibility then they should be held accountable.”

The second official said the proposal is an international level corporate structure where the project looks for the best person in the market and pays them well, but also lists out targets and holds them accountable.

This entirely professional management would then have a technical board with members from both countries to whom it reports and even gets support and the board in turn would be accountable to the Authority consisting of senior officials from both countries.

This is drawn from the ‘Hydropower Committee’ report of 2017 where an expert body was tasked by the former cabinet to come up with a ‘Hydropower Development Strategy.’

The report says with projects being delayed and facing huge cost overruns, there is a need for expert committees that are duly empowered to interact with project managements and act on any or all technical matters on behalf of the governing bodies in bilateral projects.

It says the practice of appointing management teams by respective governments could be done away with and instead the governing bodies should agree to select and appoint professional management teams based on competencies and whose retention should be based on performance.

It also says management of projects should ensure the building of Bhutanese capacity.

The recommendation is that project governance bodies and the management teams should be professional, dynamic and transparent, and supported by competent technical expert committees.

The report calls for competitive selection processes in the selection and appointment of project employees, while there should be, preference should be given to Bhutanese and to building local capacity. It also says that far as possible, remuneration should be based on ‘equal pay for equal work’.

The second official said the visit of the power secretary will allow for discussions to start on the review of the entire hydropower cooperation between Bhutan and India.

He said that as said by others, hydropower is one of the cornerstones of the Bhutan-India Friendship.

He said that India is also interested in cooperating beyond 10,000 MW. He said there is interest on both sides to do reservoir projects like Sunkosh and Kuri-Gongri but modality has become an issue.

While the MoEA Minister announced that Sunkosh is on hold for now (but not shelved), the second official said that Sunkosh is a good project and it has a lot of potential. He said even if solar and wind is cheaper but solar only works when there is sun and wind only works when there is wind.

He said this is where hydro projects and particularly reservoir or storage hydro projects can step in to meet the gap when solar and wind are not available.

In 2006, Bhutan and India signed the ‘Agreement on Cooperation in the Field of Hydropower’ which would aim at 5,000 MW but in May 2008 when the then Indian Prime Minister Manmohan Singh visited Bhutan this was upgraded to 10,000 MW by 2020.

This was formally signed in March 2009 in the protocol to the 2006 agreement.

Of the projects on the list only the 720 MW Mangdechu has been completed, 1020 MW Punatsangchu II will be completed around 2024 and 1,200 MW Punatsangchu I is still awaiting the response from the Indian side on Bhutan’s proposal to abandon the current dam site and instead build a barrage.

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