In a development that would cause the government to revise revenue estimates and recalculate its expenditure for the next five years, both the 1,200 MW Punatsangchu I (P I) and 1,020 MW Punatsangchu II (P II) projects are expected to undergo huge additional delays.
A government official, on the condition of anonymity said the Punatsangchu Hydroelectric Project Authority (PHPA), submitted a report last month communicating the delayed completion dates.
From the current completion date of July 2019 the P 1 project would now be done only by December 2022 which is a further delay of three years and six months. Given that the project was originally supposed to be completed by November 2016 this would mean a total six years delay.
In the case of P II project from the current completion date of December 2018 the delay would be till September 2019. This would mean a nine month delay. Considering that the project was originally supposed to be completed in 2017 this is an almost two year total delay.
The Punatsangchu Hydroelectric Project Authority (PHPA) MD R.N Khazanchi confirmed there would be additional delays in the completion date of both the projects though he declined to go into the specific dates.
The cause of delays in the case of both the projects are due to the ongoing strengthening works on geological faults with P I suffering from a slide on the right bank of its dam location in July 2013, while the P II in January 2016 came across a shear zone in its downstream surge chamber in the power house complex which lead to the death of six Indian workers after a the roof of the cavern collapsed.
R.N Khazanchi said that they have also sought a second opinion on the strengthening works in both the projects from the Norwegian Geotechnical Institute (NGI). He said that there would be more information on the completion dates once the NGI study was over.
The opinion sought would be to see if the ongoing works are adequate and if more work needs to be done.
Khazanchi said that the authority wants a more holistic and full proof assessment of the strengthening works. He said that the matter had been submitted for review to the NGI in February 2017 which would get back with its response after three months.
It has been learnt that it was the government who insisted to the PHPA that an external consultant like the NGI should be hired so that there are no issues even in the longer run once the projects are completed.
There are now also questions on how the whole matter has been handled from the beginning, especially in the case of the P I’s right bank slide. A major slide first happened in July 2013 though potential problems there were noted much earlier. At the time the PHPA handed the matter over to the main consultant Water and Power Consultancy Services (WAPCOS) along with Central Water Commission (CWC) in India.
From 2013 itself, Bhutanese officials wanted to hire external experts but WAPCOS assured that it would look into the matter and come up with the remedies. After an initial study a Nu 3.5 bn price tag was added along with a project completion delay which eventually got extended to December 2019. However, it has been learnt that this was a problem even not encountered by WAPCO’s before and so the government managed to push for an external third party opinion.
Despite the seriousness of the situation no PHPA authority meeting was held from August 2015 to August 2016 to discuss the issue. This was even after the January 2016 roof collapse of the P II project. The PHPA is chaired by the Minister for Economic Affairs as its Chairman. The current Minister for Economic Affairs Lyonpo Leki Dorji pushed for the meeting after taking up his current position.
An earlier audit of the P I project showed that before the start of the construction of the project the PHPA project management, WAPCOS and CWC knew that that were geological weaknesses at the new right bank area as indicated by a preliminary Geological Survey of India (GSI) report, but they still went ahead and approved the tendering of the dam on the same site.
This was after the former cabinet in 2009 approved the new and current dam site of P I based on a proposal from PHPA that the new site would mean extra generation of power.
The P I project is supposed to generate 5,300 million units in a year which is more than Tala. Even if a minimal Nu 2 per unit tariff is applied the P 1 along stands to generate Nu 10.6 bn a year in total revenue. The P II generates 4,700 units and even with a Nu 2 per unit tariff would generate Nu 9.4 bn a year.
The delay in the two above projects and especially for P I would mean a lot of potential revenue foregone. This would require recalculation of revenue for the coming years including the entire 12th five year plan’s revenue projection which so far had been optimistic expecting P I revenue to flow in from late 2019 onwards. This would ultimately mean the government having to tighten its belt on the expenditure front and also look for other sources of revenue.
A government official said that given the scale of problems in P 1 even the 2022 date currently looks optimistic. A situation like this coupled with Bhutan’s Joint Venture Projects not going too well raises questions on Bhutan’s strategy of putting all its eggs in the hydropower basket. This is especially on the back of the huge loans taken for these projects.