Major issues being sorted out between DGPC and SJVN in 600 MW Kholongchu JV project



18th September 2015 saw some smiling photo opportunities as the Kholongchu Joint Venture project started its pre-construction activities with a loud bang.

However, hidden behind the smiles and handshakes were serious issues between the two JV partners Druk Green Power Corporation (DGPC) and Satluj Jal Vidyut Nigam (SJVN).

The differences were so strong that it even lead to the postponement of board meetings and the non signing of the Concession Agreement which is vital to do the major works like dam, head race tunnel and power house.

The differences are currently in the process of being resolved and it is hoped that an agreement can be reached soon for the project to continue going ahead.

The problem essentially boiled down to the SJVN management at the time not willing to completely adhere to the larger umbrella ‘Inter-Governmental Agreement for the Joint Venture Projects,” signed between India and Bhutan in April 2014. This agreement was the bible for the four JVs agreed to between the two countries.

The issues were pointed out by the Bhutanese side in April 2016 when a GoI delegation led by the Power Secretary P.K Pujari came to Bhutan for discussions on hydropower.

In spite of the JV agreement mentioning a 30 year concession period where SJVN would own 50 percent of the project, SJVN asked for 35 years.

There were bigger problems in management as the SJVN was not agreeing to place the DGPC nominated Bhutanese Joint Managing Director (JMD) as second in command in the project whereby Director Technical and Director Finance have to report to the Managing Director through the JMD.

This was not in keeping with the Inter Governmental agreement and also the Shareholders Agreement between the two countries.

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