MoEA Lyonpo says action being taken on PHPA 2012-2013 Audit Report

The Minister for Economic Affairs Lyonpo Norbu Wangchuk said that the PHPA has submitted an action taken report to the Royal Audit Authority (RAA) on the joint audit report of the RAA of Bhutan and Comptroller and Auditor General (CAG) of India on PHPA – I from 1st April 2012 to 31st march 2013.

The minister said that the RAA is reviewing the action taken report of PHPA.

Lyonpo said that the joint audit report was first received by the ministry of June 2014 and finally by August 2014 the PHPA submitted an action taken report.

He said that there were a total of 26 issues and findings in the joint audit report on P I.

Lyonpo noted that an important observation from RAA was that dam shifting upstream was a hasty decision and therefore the sliding right bank problem emerged. He clarified that the dam shifting decision had already been taken and significant work had been done by the time he came into office.

He said that report pointed out an annual revenue foregone loss of Nu 16 bn due to the delay caused by the dam shifting. Lyonpo said the PHPA had said that the dam shifting work had been done on the strength of the investigations but the RAA differed and felt it was not comprehensive enough.

Referring to the right bank Lyonpo said it was an unfortunate geological event as the intention to move the dam was good as it was expected to generate an additional 105 MW of power.

“When I took over I examined the situation and decided to focus my energy on correcting the situation. The project is now on track as strengthening measures have all almost been put in place and the right bank is more or less stabilized,” said Lyonpo.

Lyonpo pointed out that the new damn construction method would save up to one year, other components like the tunnel and powerhouse were on track and that the latest cost revision had been approved by the Indian government.

He said another major observation was on deviated items of works which is doing more work then provided for in the DPR. He said the Audit observation had said that the CWC guidelines had not been followed in the analyzed rates and instead of a 20 percent profit margin a 25 percent profit margin was being given to contractors. Here Lyonpo clarified that the tender documents were prepared before his time.

He said the defense put up by PHPA was that the CWC guidelines were not specific and discretion could be used based on the situation.

The minister then commented on the Audit report finding that found that PHPA officials were travelling 200 to 300 days a year. He said the main reason for this was that the headquarters was in Thimphu while the project sites were outside Thimphu.

He said the remedial measure taken by the government was to shift all headquarters to the project sites. He said measures like a mandatory tour report after completing a tour and restricting tours to 6 days in country and 5 days outside in a month would curb such tours.

Lyonpo said that these were just a few examples but action was being taken on other issues too.

The PHPA report had pointed out Nu 1.4 bn worth of avoidable extra expenditure, overpayment, waste and irregularities.

The report showed that the PHPA project management, Water and Power Consultancy Services (WAPCOS) and Central Water Commission (CWC) knew that that were geological weaknesses at the area but still went ahead and approved the tendering of the dam on the same site. This lead to Nu 3.5 bn in additional cost for rectification works and time delay.

The report also estimated that the Bhutan would be losing Nu 15.97 bn in notional revenue loss for every year of the 1200 MW Punatsangchu I project being delayed. With the project being delayed for an additional two years and five months from the original completion date of November 2016 to now the proposed April 2019, the total notional revenue loss comes to Nu 38.59 bn.

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