The National Council (NC) unanimously supported a proposal to recommend that the government immediately initiate negotiations with the government of India (GoI) for a long overdue revision of the Chukha Hydropower Plant (CHP) power tariff.
Head of the Special committee, Karma Yezer Raydi along with other members said the increase in power tariff at a time when the country is faced with the INR shortfall will greatly ease the problem.
He said, “Government says there will be high INR earnings in future because of hydropower but people need INR today. It would enhance our revenue if government could revise power tariffs of existing hydropower plants”.
Since 2008, the export tariffs for Kurichu hydropower plant has been merged with that of Tala following the signing of an agreement between the two governments. The agreement allows an increase of 10% from the initial Nu 1.80 per unit every five years till the loan is repaid and thereafter by 5% every five years.
The Basochu power is almost entirely used for domestic consumption.
Karma Y Raydi said, “At this time there is no scope for increase in export power tariff from the other plants except for CHP which is a possibility”.
Wangduephodrang NC MP Sonam Yangchen said the first rate was fixed at Nu 0.19 per unit when the project was commissioned in 1986 and has been revised six times till date taking the rate to Nu 2 per unit which also included certain premature increases despite the four year period.
Therefore, the tariff revision has not happened in 2009 because of GoI’s position that earlier increases were affected before they were due. GoI in a letter to the government said the hike was applicable only in 2014. However, the earlier premature increases were affected on the basis of political goodwill and the spirit of friendship shown by GoI towards Bhutan, mostly as a result of the requests made directly by His Majesty the King.
While the generosity of GoI is undoubtedly genuine and beyond the gratitude of the government and people of Bhutan, the earlier demonstration of goodwill is at risk of being tarnished when it has now been used to delay the review in rate that is supposed to be done every four years.
Justifying the increase in CHP power tariff, NC MP Sonam Yangchen referred to the agreement signed between the two governments on March 23, 1974. It governs the power tariff for power exported from CHP.
Article 8 of the agreement allows the fixed rate of power to be reviewed by the two governments at the end of each 4-year period based on a set of criteria such as owing to increase in operation and maintenance charges, average percentage increase in the cost of hydro-electric power in the northern region of India and also due to any other relevant factor.
The current average possible tariff she said works out to Nu 3.25 per unit after considering all the factors.
She also referred to Druk Green Power Corporation’s (DGPC) 2011 report titled ‘proposal for revision of export tariff of CHP’ which proposes an increase in the power tariff by Nu 1.25 per unit from the current rate.
If the increase is implemented, Bhutan will be benefited with additional revenue of about Nu 2.3bn based on CHP generation of 1,839.91 MU of energy in 2009-10.
The Gasa NC MP Sangay Khandu said “there is an acute shortage of power in India and the estimated requirement of power in India was 861,591 MU while available power was 788,355 MU resulting in a total shortage of 73,236 MU.
He said Bhutan’s total power generation of 6971.71 MU even if wholly exported would cover only about 9.5% of the energy shortage in India implying that India suffers from an acute shortage of power which is eased to an extent by power imports from Bhutan.
MP Sangay Khandu reiterated on five different justifications to support the proposal for a tariff revision. He said “the proposed tariff of NU 3.25 per unit is still lower than the expenditure incurred for power purchase by India through other internal resources and the expenditure on Bhutanese power is a miniscule fraction of India’s total expenditure on electricity”.
NC’s legislative committee chairperson Kuenlay Tshering suggested that revision on power tariffs during slack seasons be included. “In winter when our rivers fail to produce maximum quantity of energy, we are bound to import electricity from India at higher rates than when we import,” he said.
A politician in the capital said there is a better chance that GoI may consider the revision this time since the upper house of parliament has proposed to do so.