Hydropower must remain a public entity: Council

December 1, 2015
The House supports the committee’s proposal to amend the electricity Act and hydropower related policies

Hydropower: To ensure that hydropower projects in future do not become concentrated in the hands of few business entities, the Bhutan Electricity Act 2001 and related policies that paved way for private investments will be amended.

With the National Assembly expected to amend the Act, the National Council yesterday agreed to its ad-hoc committee’s recommendation to look into amending the Bhutan Sustainable Hydropower Development Policy (BSHDP) 2008 or the Act.

This is one of the eight recommendations the committee proposed after a yearlong review of the country’s hydropower development policies and programmes.

On financing and ownership, the ad-hoc committee recommended that for joint venture projects that do not need to be reverted to the government at the end of the concession period, royalty energy contribution should be increased beyond 18 percent.

The committee members said this recommendation would need to be accompanied by an amendment to section 37.1 of the Bhutan Electricity Act 2001.

One of the members, proposing the amendment in the Act, was eminent member Dasho Tashi Wangyel.

hydropower

He said, Chukha, Kurichhu and Tala hydropower projects were funded on 60 percent grant and 40 percent loan. This funding modality changed to 60 percent loan and 40 percent grant in case of Puntsangchhu I.

The loan portion further increased to 70 percent and grant to 30 percent, with a simple interest for 10 years for Punatsangchhu II and Mangdechhu project.

The grant portion reduced to 15 percent for Kholongchhu project with a 70 percent loan. For 30 years, he said, the ownership is divided between the companies, DGPC and its partner.

“Both the aid money into the projects and authority with the Bhutanese have been decreasing with new projects over the years,” Dasho Tashi Wangyel said.

The Bhutan Electricity Act 2001, BSHDP 2008, and the Alternative Renewal Energy Policy 2010 provided opportunities for investment outside the government in the sector.

NC chairperson Dasho (Dr) Sonam Kinga reminded the members of His Majesty The King’s advise that hydropower is a national resource and it should not fall in to the hands of few individuals.

Chukha Councillor Pema Tenzin said of the 50,000 people working in the hydropower sector only 10,000 are Bhutanese and the rest expatriates.

A unit of electricity, which costs Nu 2 in Bhutan, is sold at about Nu 8 in India by the power importing companies, where has become a concern as the government does not have a final say in fixing the export tariff.

Foreign investors, despite many other opportunities, want to invest in hydropower projects, which is why it has to be dealt by the government alone.

“Experts from Nepal applaud our progress in the sector and have cautioned not to open it to private investors as they did,” Pema Tenzin said. “Today they have a huge problem – in that a single river is dammed many times, the issue is embroiled in politics and thus, the benefits from the projects are hijacked.”

Pema Tenzin said should Bhutan involve too many private players with minimal ownership and authority with the government, it runs the danger of not just losing revenue but also its pristine environment.

He asked if the government could go slow in building the projects and explore ways to employ locals to gain experience and implement projects that are managed by Bhutanese.

Members said agencies such as Druk Green Power Corporation and Construction Development Corporation Ltd be given opportunities to execute works at the projects to develop local expertise.

However, members pointed out the government had given leeway in signing the agreement in 2009 violating the provisions of the BSHDP 2008 such as the appointment of the managing director of the projects.

Members expressed their support to the committee’s recommendations.

“If these recommendations are