Ouch! The Rupee Crunch
The recent belt-tightening measures announced by the Royal Monetary Authority, following the Rupee crunch, have thrown a large number of Bhutanese people into a high state of anxiety. Unerringly reactive, it was comical to see a huge number of Bhutanese people queuing up at the fuel pumps - in an effort to top up their vehicle fuel tanks - proof that they have not really understood the extent of our problems.
Regulating the outflow of Rupee isn’t going to solve our problems - not even in the short term. However, it is a start. But we need to go beyond that - we need to make some serious structural adjustments. It is time for some hard decisions. It is time that we are shameless about admitting that the pursuit of our past and present economic polices, if there was one, need a 360° turn around.
While we tinker with our economic, fiscal and monetary policies and redirect our focus to some fresh thinking and perspective, an inconspicuous article in an obscure Blog may hold one among many answers to the mystery surrounding the inexplicable Rupee crunch.
An article headlined "Food For Thought…..” in the Blog authored by K B Wakhley (http://www.kbwakhley.blogspot.com) contains a strangely alarming and intriguing insinuation. He reveals that the Bhutan Power Corporation Limited is paying the Indian contractors a whopping Nu.37.08 million for every KM of the combined 159.1 Km of the two 400kV double-circuit transmission lines that run from Punatsangchhu-I Hydroelectric Project site to the Bhutan-Indo border.
As corroborated by an Indian expert in an email addressed to K B Wakhley, the cost of construction/installation of the transmission lines should not exceed Nu.15.00 million per KM. As opposed to that, the Bhutan Power Corporation Limited has paid a sum of Nu.37.08 million per KM - more than one and a half times what it should cost us!
At first glance, overpayment on a project component that represents merely 5% of the overall project cost should not be a cause for concern. However, as I delved deeper into the issue, my thought process enters the realm of the seriously bizarre and the whacky.
What, for instance, if the overpayment is not an isolated case? In other words, what for instance, if we were to discover that over-design and exaggerated costs are inherent in all of the hydropower projects in Bhutan? What, for instance, if we were to discover that the hydropower projects should cost us less than half the current projections?
Besides other even more devastating implications that boggle the mind, could it be that our much touted hydropower projects are at the core of our Rupee crunch woes?