BBS, Bhutan’s national broadcaster reports:
India approves PHPA I’s new cost estimate of Nu 93.75B (http://www.bbs.bt/news/?p=52340).
That is very bighearted of India. But what of Bhutan, the bigger stakeholder in the project? Bhutan’s share is 60% - so what does Bhutan say? Does Bhutan approve too? Does Bhutan accept the cost escalation from its initial estimate of Nu. 35.00 billion to its current Nu. 93.75 billion?
And what of the losses? Is Bhutan required to bear the losses resulting from decisions made by the Indians - even while they were categorically pointed out by the Geological Survey of India that the new dam location was geologically unstable? The relocation of the dam site has not only delayed the project by years, it has also taken up the cost of the project by Nu. 4.5 billion. This does not take into account losses running into billions - through loss of revenue as a result of delayed project completion. The project completion date has now been moved to 2019! If past records are anything to go by, this too will be further pushed back.
The other issue I have been raising is that of the unit cost of generation of the Punasangchhu-I. How can anything remain profitable when its cost of production has gone up by 400%? The Punasangchhu-I was started with a cost estimate of Nu.35.00 billion. It has now gone up to Nu. 93.75 billion. By the time the project gets done, if ever it gets done, the cost would have escalated to somewhere around Nu. 120.00 billion.
Already, the cost of generation - at the estimated project completion date of 2017 - is said to be around Nu. 4.00 per unit. The project completion date has now been pushed back to 2019. An educated guess would be that the project would not get done even by 2022. This means the unit cost will go upto something like Nu. 6.00 per unit.
By contrast, Bhutan’s electricity is currently sold to India at an average rate of Nu. 2.00 per unit.
One does not have to be a mathematical wizard to understand what is happening with our famous hydro-power projects!
Even worst, because of the unstable nature of the mountainside, the Punasangchhu-I project will now be using a new and, ENTIRELY UNTESTED, atleast in the Himalayan region, technology of dam construction called Roller Compacted Concrete (RCC). A complete departure from the tried and tested method of Conventional Vibrated Concrete (CVC).
As of now, it is anybody’s guess - may be it will work, may be it will not. However, even if the dam holds up, we still need to pray to God to come to our rescue - because looking at the figures, it is simply impossible to pay off the loans - from selling electricity generated by this doomed project, if ever it will.
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