A Very Un-Neighborly Interest Rate?

India recently inaugurated the start of work on their 508 KMs Mumbai-Ahmedabad Bullet Train project that is expected to be completed by 2023. The project was initially estimated at Rs. 63,000 Crores but it now stands at Rs.110,000 Crores (about US$17 billion). This is 8 times Bhutan’s GDP! But that is not the breaking news.

Of this total sum, 81% or Rs. 88,000 Crores is being loaned by Japan. That is still not the big news.

Even more interesting, the loan is repayable over 50 years – starting after 15 years as of 2017. That is very, very interesting – but not entirely earth shattering.

What is THE BREAKING NEWS is this: India is getting the loan from Japan at 0.10% p.a.!!! Yes, what you are seeing is correct – the interest rate is ZERO POINT ONE ZERO PERCENT!

Compare that to what Bhutan is paying to India for our doomed hydro-power projects:

10% p.a.

This is one hundred times more than the rate India will pay Japan!!!

India is our closest friend and ally – through thick and thin, we have been with them ---- so naturally we are very happy that they got such a fantastic deal from Japan.

But what about us? India is an emerging economy with a GDP of US$2,400 billion. Our GDP is a minuscule US$2.4 billion – less than one thousandth of India’s.

How come a poor country like Bhutan is paying an interest rate that is hundred times more than what one of the world’s biggest economies is paying?

Sad!

A Handful of Red Bhutanese Earth – After 52 Years

In a faraway land at the edge of the earth—a place called Sacramento, California, USA, 14 time zones away from Bhutan—a young starry-eyed novice amateur ham operator sat at his set, rotating the dial of his station. Suddenly, he chanced upon what is known in ham parlance as a “pile-up”. Incredulous and spellbound, he edged closer to make sure that he was hearing correctly what was being transmitted over the airwaves in single sideband, or SSB, mode.

There was no mistaking it! Even as he listened breathlessly, he realized that he was witness to an extremely rare ham radio event. A dream opportunity was being orchestrated right in front of his eyes—or ears. And yet, he could not participate, hampered as he was by his older, simpler continuous wave, or CW-only, radio set.

All of a sudden, through the deafening cacophony of a million SSB calls, he heard an unmistakable South Carolina drawl:

“OK boys, now let’s stand by for the Corn Whiskey (CW) station.  The Corn Whiskey station only, please, go ahead.” 

His hand trembling with excitement, the novice grabbed his telegraph key and, in a series of dits and dahs, sent out his then CallSign, WA6SVY, in CW mode: Morse Code.  The center of the universe on the receiving end acknowledged his call thus:

“WA6SVY you are five-seven-nine."

It was 29th April, 1965, 8.19 AM in Sacramento; 9.19 PM in Thimphu. The young operator was the 17-year-old novice ham, Stephen Frederick Jones. The operator on the other side of the globe was none other than the legendary American Ham radio D’Xpeditioner, Gus Browning. Gus, as he was known in the ham world, was operating from a land that fewer than 0.50% of Americans had heard of—a place called Bhutan, then considered the rarest of rare ham radio countries.

In the annals of ham radio history, it was a signal event, literally and figuratively. For the young Steve Jones, it was a windfall few amateurs around the world dare dream of: getting a QSO, or conversational contact, from the fabled Gus. Even more astonishing, Gus was operating from a ham radio Shangri-La, a mythical Himalayan Kingdom that to this day eludes most people’s geographic familiarity.

Ham Radio CallSign of Stephen Frederick Jones, as he was known as a novice operator.

QSL Card of Gus issued to Steve Jones for his contact in 1965

More than half a century of pinning to operate ham radio from Bhutan, the young novice – now a greying 69 years old First Class ham radio operator – Stephen Frederick Jones - has finally made it to Bhutan. He arrived Paro this morning - 12th October, 2017 and right away went about trying to string up his 160M wire antennae. But before he proceeded with the set up, he stooped to the ground and gathered up a handful of red Bhutanese earth and uttered; “I am finally here”.

Steve & Valerie

Mr. Stephen Frederick Jones started to send out his radio signals to the world hams – beginning this evening. He will operate until the night of 18th October. To honor the legendary Gus, Steve has named his DXpedition “Gus Browning Memorial DXpedition” (http://www.arrl.org/news/gus-browning-memorial-dxpedition-offers-opportunity-to-work-bhutan-on-top-band).

Trendy Sand Buckets For The Sake of The Environment

I am quite unwilling to believe that we can repair the destruction we have already caused to our environment. But certainly I believe that we can halt it from further ruin. For that reason, for the past over a decade, I have stopped using toilet paper – I use water – it is more hygienic, it is good for the environment and, more importantly, it doesn't burn a hole in your pocket.

To reduce the proliferation of harmful plastics, I never accept a plastic bag when I go shopping – I gather up all my merchandise in my arms and carry it off to my car. It is not much, but that is still one plastic bag less for the landfill. Each of us has a responsibility to act mindfully, to care for the environment that is getting sicker by the year. We need to talk less of environment and do more for its protection.

I have a trek coming up in the next few days. One item that caused me considerable bit of worry and exasperation was the matter concerning a sand bucket that I needed - for use in the toilet tent to hold sand/earth. I just didn't want to use a plastic pail. I didn't have an answer to my problem - until I thought of Clean Bhutan.

I had seen that Clean Bhutan was into salvaging discarded empty plastic packets of chips, milk powder etc. out of which they produced bags and a variety of colorful containers and boxes. I went over to their office to speak with Nedup, and to ask if he would organize the weaving of few pcs. of containers for me. My specifications were simple - they should be sturdy enough to stand upright and hold sand/earth, but supple enough that I can fold them to be stuffed into Zems. Three days later, I had three pcs. of multi-colored containers fashioned out of waste plastic wrappings.

 Trendy & colorful. Sand buckets fashioned out of discarded plastic wrappings

Sturdy enough to stand upright and hold sand/soil, and yet supple enough to be folded and stuffed into Zems

I dare say that this is a trendy way of contributing to the cause of the environment.

The Doklam Thaw - Nothing Changes for Bhutan

It appears that there is a thaw in the stand-off at Doklam between China and India. Both Chinese and Indian spokespersons have individually made the disengagement announcements to the world audience.

But nothing changes for Bhutan – the issue remains unresolved – to be stoked time and again in the future, at the will and fancy of China or India. This temporary respite is nothing to be gleeful about. We need to resolve this border issue, once and for all.

One Nepali writer – Mr. Bihari Krishna Shrestha - recently wrote as follows:

“Talking about Bhutan too, recently there was a BJP leader who had the impudence to tell his audience in Kathmandu that India would like to see Nepal remain “as happy as Bhutan”. One just has to ask the Bhutanese if they are happy to be remaining as what is basically India’s caged pet!”

Caged pet indeed! I should take offense at his remark – and I do – but not for the malice that was intended – but for failing to use a more precise nomenclature to describe the true nature of Bhutan-India relationship. By definition, “pet” is not a plaything – but an object of love and adoration and indulgence. Mr. Bihari Krishna Shrestha does not seem to be aware that Bhutan does not have the good fortune to be India’s pet. He would have been spot on if he had added a short 3-letters word “pup” before the “pet”.

Disengagement at Doklam between China and India is cold comfort for Bhutan. In fact, why are we even talking about it? But certainly, there is a lesson to be learnt from this incident – that Bhutan runs the risk of being violated by any one of these big powers, as and when they have a need for posturing. And they will do it with impunity – as has happened this June. So the answer is: sort it out once and for all. And let us do it quickly – the time for pussyfooting around the issue is over.

Without so much as a by your leave, two invading foreign armies were engaged in acts of aggression, in a region that we believe is ours. Our fear is not the dread of loss of territory that is in any event under dispute – but the fall out from a war that is not of our waging. If China and India wishes to engage in war, they should do so in their own territories – not on ours.

Until this Doklam incident happened, 99% of Bhutanese did not know that there was a dispute between China and Bhutan, at that location which is now being called Doka-La. My own understanding was that the dispute was further up North where the Google map clearly shows as disputed territory – a patch of land known as Doklam Plateau. The dispute down south I have never heard before, nor does the Google map show it as a disputed territory.

Ever since the Doklam incident, I have started to look at the map a little more closely. Because, frankly, the treaty of 1890 that keeps popping up does not relate to Bhutan and its territorial boundaries. For me, the traditional knowledge of the Haaps and the Tibetans is more authentic than the lines drawn on the map - because they have physically lived those boundaries that have existed for hundreds of years. I am unwilling to accept that those imaginary lines drawn across the map – like those of the McMahon Lines in the North-East, hold water because the boundaries were never surveyed and demarcated between Bhutan and Tibet-China.

China and India are big countries – but truth is bigger than both of them combined. Thus, let us settle the borders, based on what is THE TRUTH. One cannot hope to alter the truth simply because it does not suite ones purpose.

All manners of maps are being put out in the internet - there is whole lot of confusion out there. For the benefit of the confused Bhutanese, I spent some time to study the maps and the claims and counter claims being made on the territories. In the following maps, I have clearly marked what is the current claim made by Bhutan and those made by China. Rest I leave to your imagination.

ENJOY!

Doklam Plateau And The Shifting Tri-junction Points

As much as I try to desist from writing on the issue of Doklam that has prompted a hoard of ill-informed and poorly educated people around the world to hurl derogatory terms such as “puppet”, “vassal”, “protectorate” etc. at Bhutan and the Bhutanese people, I am unable to contain myself, simply because what is being put out is so much falsehood and misinformation and treachery and dishonesty.

The stand-off between India and China, from what is clearly obvious, is not based on their necessity for that piece of land, or on their legal or historical right of ownership over that land, but because, by their own admission, that land will give one of them strategic dominance over the other. If contemplation of war is at the core of their act of belligerence, all that one can say of these two countries is that they suffer from paucity of morality and human decency. It is Bhutan’s misfortune that we are centered between these two debauched nations.

It is rather odd that the world is being mislead into believing that these two nations need, of all things, a desolately located Himalayan plateau, called Doklam Plateau, to give them military dominance over the other. How many of us will buy that logic? If wars are to be fought and won, it will not be won from atop a frigid plateau located deep inside the Himalayan ranges. Each of these two nations have superior military power, with nuclear capability. Thus, if war is their intention, each of them can simply activate a switch siting in Beijing and New Delhi and annihilate each other from the face of this earth. Thus their argument that Doklam Plateau is critical to their national security is not tenable.

Even if that were true, it is still not good enough or valid enough reason for any country to trample on the sovereignty of a small and peaceful country such as Bhutan, who is, after all, the only country that has the moral authority and historical legitimacy, to give credence to the claims and counter claims being made by these two countries who are shamelessly engaged in irrelevant verbosity.

The world would have noticed that the one country that, by right, should be at the center of this brouhaha is conspicuously silent over the whole matter - other than a half-hearted Demarche issued in June of this year.

Doklam Plateau is at the Tri-junction of Bhutan, Sikkim and Tibet. Of these three countries, Bhutan is the only one that is still standing. China and India may have selectively annexed Sikkim and Tibet, but their overlording these nation states do not empower them to speak with knowledge and authority. Their relevance begins in 1950 in the case of China, and 1975 in the case of India. As opposed to that, the knowledge base of the people of Bhutan, Sikkim and Tibet on the matter goes back many centuries.

While India was buckling under the successive colonial yoke of the British Raj, the French and the Portuguese, the Bhutanese and the Tibetans were happily grazing their yaks in the Doklam Plateau areas – fully cognizant and respectful of their respective boundaries. There was no confusion.

Similarly, while the Manchus and the Mongols and the Japanese were one after the other subjugating the Chinese, the Bhutanese and the Tibetan’s were quite merrily trading and exchanging merchandise across their borders and living in harmony.

Something that the world must consider very seriously, even if the Chinese and the Indians won’t, is this: there was never any disagreement between Bhutan and Tibet concerning their territorial boundaries. The Bhutanese and the Tibetans made their annual migrations to the pasture lands in the Doklam areas, to graze their yaks in peace and harmony. They both knew and respected the exact locations of their respective boundaries.

So then why is there a dispute now? How can two Johnnies-come-lately start disagreeing on the physical boundaries that have been in place for centuries – perhaps even pre-dating their respective civilizations? Has there been some tectonic shift in the Eastern Himalayas that have caused some drastic geographical alterations in the Doklam areas, causing traditional boundaries to go for a spin?

Four years to the month (August 2013), I had written that the issue of Doklam is dangerous and that we should resolve it without delay. Four years since, we are still engaged in the same useless cock and bull story that cannot contribute to solving the problem that needs solving. We all know that without the backing of truth behind what we do, whatever we do will be doomed to failure. Let us not postpone that which is inevitable – the dispute needs to be resolved – it cannot be postponed forever. Doing so thus far has already complicated the issues as can be seen from the following:

To begin with, the disputed area between Bhutan and China was supposed to be at the Doklam Plateau areas, located on the West-South of Haa, as depicted in the above map.

The most recent claims emerging as a result of the stand-off between China and India indicate that the Tri-junction is now centered at a place called Gymochen, further down south of Batang-La which was earlier taken as the Tri-junction point.

Consequent upon relocation of the Tri-junction point to Gymochen further down south, China now claims addition land, as indicated above.

Bhutan should settle the issue of the Northern borders with China, without further delay. It would be stupid to assume that we can stall the matter indefinitely - a day will dawn on us when we have to make the settlement - we all know that. Thus, it is better that we do it sooner than later. If 24 rounds of border talks with China hasn't brought us any closer to arriving at a settlement, I do not know what will help.

 Certainly not audacity!

Emerging Crisis at Doklam

In the aftermath of the standoff at Doklam between India and China, there have been some discussions about Bhutan being a vassal or protectorate of India. The resurgence of this confusion and ambiguity is evocative of the post independent India, when this subject was keenly discussed and debated as a process of the consolidation of free India.

Upon seeking clarification from Sir Benegal Narsinga Rau, the Constitutional Advisor of the Government of India, the following is how he interpreted the status of Bhutan in 1947, in relation to India:

“Bhutan could not be an Indian State ‘strictly so-called’ and could not be taken even to be State in India. Its precise legal status was, therefore, of a foreign state governed by treaty relations. It was a foreign because it was in law not an Indian State nor was it a British territory. It was governed by the limitations imposed by the agreement which Bhutan had signed in 1910 with the British in India.”

So, the confusion and misunderstanding had been cleared 70 years back - as far back as 1947. Thus, any further discussion on the matter is inconsequential. However, what needs to be discussed is the progenitor of all the discussions: Doklam and the standoff that persists there!

My interpretation
It is my view that this was an orchestrated posturing by India, without ill will, ofcourse.

Let us follow the march of events:

18th June, 2017     - Doklam scuffle starts

25th June, 2017     - Indian PM Modi visits USA where he signs deals for
                                 purchase of drones.

4th July, 2017       - Prime Minister Modi visits Israel – first ever official visit
                                 by an Indian Prime Minister to the Jewish State of Israel.
                                 During the trip Modi signs deals for purchase of military
                                 hardware running into billions over many years – deals that
                                 USA is reluctant to make with India directly, for fear of
                                 repercussions from China to whom USA owes trillions.

10th July, 2017     - the tri-nation Malabar Naval Exercise in the Bay of Bengal
                                 begins, in an obvious demonstration of US’s pivot towards
                                 India and a new found camaraderie between the three
                                 nation states of India, Japan and the US.

To me it seems like PM Modi is on a shopping spree, for military hardware, and needed this posturing at Doklam to ramp up support at home. This may or may not be true – but what is clear is that India seems to be in some kind of desperation to deploy their military inside Bhutanese territory.

During the crisis of the early 1960’s arising out of the assassination of the late Prime Minister Jigme Palden Dorji, India seems to have contemplated deploying their military inside Bhutanese territory. On 2nd May, 1964, the then Indian Foreign Secretary Mr. Y. D. Gundevia, in his “Notes on Bhutan” wrote as follows:

“To begin with, it was felt that we could parachute a battalion into Thimphu, which would be supported by more troops transported by road from Hashimara. We had debated that if we were forced to do this, this might provoke the Chinese into crossing the Bhutan border from Chumbi valley.”

The fear of China coming to the aid of Bhutan seems to have prevented them from doing so.

Again, in the early 1990’s India offered to deploy their military to flush out a number of their militants forcibly camping inside the forests of Southern Bhutan. Our fourth King politely but successfully warded off such a perilous move. However, this year India seems to have finally been able to forcibly deploy some of their armed military personnel inside Bhutanese territory, in Doklam area. Bhutan is now in a crisis mode, as a result.

China is obviously aware that Bhutan will never invite Indian soldiers to jostle them at Doklam, thus they are incensed by this intrusion into what they point out is none of India’s business. China is livid that India has the audacity to brazenly trespass into Bhutanese territory – to mount military confrontation against them.

Does this go to prove the veracity of the British-Australian journalist Neville Maxwell’s claim that India was the aggressor in the 1962 war with China? In a repeat of history, has India tried to, yet again, intimidate China with an act of military aggression over a territory over which they neither have the right nor the claim of ownership?

Many decades of territorial claims and counter claims have gotten us nowhere, in part because we are sympathetic to India’s security concerns. And so we should be – after all, India has been generous with us for the better part of our long journey together. If India views maintaining status quo at Doklam as crucial to their security interests, by all means we have to see that we do nothing to unduly jeopardize their interests. But usurping Bhutan’s sovereign right and responsibility to deal with China does not help India. Infact it makes China even more belligerent and uncompromising. If India seeks to find a mutually beneficial solution that is agreeable to all concerned, India should be pliable to allowing the main parties involved to engage in dialogue, and not act the bully by unceremoniously shoving Bhutan aside and start smarting with China. Doing so weakens Bhutan’s position with China, and it does not help the cause.

India needs to reassess what they did in Doklam - let not ego stand in the way of doing the right thing. For Bhutan, we cannot be seen by the Chinese to be allowing anti-China elements to mount military actions, from within Bhutnese territory.

Bury The Burial Grounds - II

One of Bhutan’s Cabinet Members a few years back had said that when the Punatsangchhu Hydro Electric Project I & II (PHEP-I and PHEP-II) come on stream and start to generate electricity, Bhutan would be propelled from a third world country to the status of a donor country. Today, a little over half a dozen years later, while that dream remains shattered, the nightmare lives on. In doing the PHEP-I and PHEP-II, this generation of Bhutanese have dug ourselves some fine burial grounds in which to bury all our hydropower dreams. Unfortunately it is not only the sweet dreams that remain crushed and trampled, but in the process we have imperiled the lives of many future generations of Bhutanese.

The dream merchants had sold us a dream so hypnotic and irresistibly alluring that even in the face of imminent economic and environmental disaster, some still believe that hydropower is the only egg we have. In the process, all our other potential eggs have remained neglected, the consequences of which we will have to face in the coming years.

We have been in a state of stupor for far too long. For sure we have been led up the garden path - not to say that it is without precedence – we have walked that path once too often. But none have been as perilous as this one. The path of doom that we are now walking has drawn international attention and scrutiny. Respected international institutions have expressed doubts about our ability to remain solvent, in the face of mounting debt. An alarmed national political party has gone as far as to call Bhutan the “Greece of South Asia”. The analogy is not very far-fetched, if not downright accurate.

Consider that each of these hydropower projects will, individually, end up costing more than the country’s entire GDP. And, when the curtains come down on these behemoths – all indications are that they are both doomed to failure – our economic enslavement would be total. Being called “Greece of South Asia” would be kindness personified.

Figures released by the government show that 80% of our debt is hydropower related. And, two of our biggest hydropower projects – PHEP-I and PHEP- II are in a perpetual state of reconstruction, rather than construction, caused by what they call “geological surprises”.

It is for this reason that I call upon our government to cut our losses and shut down these disasters – NOW - before we arrive at that point of no return. We are fast approaching that threshold beyond which it will be too late for us. It is wise to be subservient to a force that we have neither the wherewithal to withstand, nor to surmount.

As I have said in my last post, we have both the elements stacked against us – economic as well as environmental. For this post I want to restrict myself to PHEP-I and its economic aspects – plain simple mathematics.

PHEP-I was originally planned for 1,000 MW at Nu.35.00 billion

It has now been upgraded to 1,200MW at a cost that is not known as of now

1 MW is 1,000 KW

Therefore 1,200 MW works out to a total of 1,200,000 KW

Going by the level of efficiency at which the projects are being implemented, we can safely assume that the projects are unlikely to achieve 40% of their installed capacity. But let us be generous and agree that the projects will achieve an average generation of 70%.

This means that PHEP-I will generate 840,000 KW of electricity every day that we could sell to India at COST+ rates.

Now, we know that as of December 2016 the cost of PHEP-I has crossed Nu.97.00 billion from its original estimated Nu.35.00 billion. As of today, not even 50% of the project has been done. Thus it is safe to assume that the final cost, if this project will ever be done in the next 10 years, will escalate to a minimum of Nu190.00 billion, at the rate of cost escalation that has been experienced so far.

This sum ties in nicely with what the Hon’ble Prime Minister had stated during his State of the Nation speech – that the country has a debt of Nu.171.00 billion of which only Nu.34.5 billion is none-hydro. NOTE: India pays 30% of the cost of these two projects, in the form of grants. We pay 70% at 10% interest.

The following is a comparative study of the project as it was initially planned, and after its generation capacity was increased to present level. The statement shows a layman’s calculation of per KW cost of generation.

NOTE: The calculations are indicative and not accurate. It is merely to demonstrate cost escalation.

As opposed to the above, our hydropower egg basket – India – is looking at charging less than Nu.3.00 per kilowatt-hour, for their solar-generated electricity. Thermal and hydropower generation is now going out of fashion in the Indian context.

The above mathematics ignore the following:

1.  It is absolutely impossible to achieve 70% generation

2.  It is impossible to maintain generation of 70% every single day of

      its rated 12,775 days of useful life

3.  It is impossible that the plants will not require repair, replacement

     and maintenance from time to time

4.  Records from Chukha and Tala tell us that during the winter months,

     generation drops to as low as 10% of their capacity

5.  De-silting: how efficient is the design? (if this is not looked into properly

     I suspect that instead of water, the dams will be filled with silt and debris

     - reducing water storage capacity)

6.  GLOFs/flooding/insufficient water/earthquakes

7.  Huge Indian currency shortage caused by these projects

8.  Cost of decommissioning at the end of their useful life

9.  Depreciation of plant and machinery

10.  Other seen and unseen costs

The Bhutanese people are constantly reminded that we have an agreement that stipulates that India will buy all of our electricity at Cost+ prices. I suppose India will be honorable enough to keep to their part of the bargain. But what is the guarantee that they will fulfill their promise in a manner that is beneficial to us, in the face of compulsions dictated by emerging market realities?

India is already electricity surplus, way beyond their need. Hundreds of thousands of GW of solar and wind generated electricity is going to be coming on stream in the next few years. Thus, what insanity would drive India to buy our electricity at Nu.18.00+? To fulfill the promise they made to us? Not at this price levels! They have other options open to them.

In my view the situation is headed in such a direction that there is no two ways about it: India will have to advise Bhutan to shut these projects down. Doing so will demonstrate that big brother India truly has Bhutanese interest in their hearts, as they claim they have. If they do so, they will stand vindicated for what they did in Doklam – that they have acted in the best interest of Bhutan, gladly and voluntarily, and without malice to one and all.

India should demonstrate good intent by not encouraging Bhutan to continue to tread this ruinous path. A mortally wounded Bhutan with her back to the wall can turn out to be a volatile ally. Before the situation spirals out of control, India should seriously look at reorienting its Bhutan hydropower policy. It will be mutually beneficial and strategically self-serving.

Bury The Burial Grounds - I

I was on my way to Nimshong village in Zhemgang where Rotary Club of Thimphu is implementing a 7-KMs long solar fencing project. Upon reaching Gelephu I was told that road to Zhemgang was blocked at 2-3 places, due to which vehicular traffic was suspended for the coming few days. So I turned back for Thimphu.

Upon reaching the Punatsangchhu Hydro Electric Project-II (PHEP-II) project area in Wangduephodrang (on 10th July, 2017), I saw a most appalling sight: the project’s cofferdam was overflowing with water. Apparently the cofferdam could not contain the massive amount of water that was flowing into it, caused by the recent incessant rains. It was clear that the size of the only diversion tunnel was not designed to handle the discharge of so much water, causing excess water to spill over the cofferdam’s barriers, into the dam foundation construction site.

A similar incidence had occurred at the PHEP-I last year, causing many months of delay in dam construction work, including hundreds of millions in additional costs, for excavation of debris and cleanup work at the dam site. And, unless additional diversion tunnels are built, or something else is done, this problem is likely to reoccur next year as well, and year after next.

How did it happen that these mammoth projects were so poorly conceived, designed and located? Who takes onus for this incredibly shoddy work? Are there any technically and commercially qualified people overseeing the construction of these two projects, whose costs, individually, will be in excess of the country’s entire annual GDP? How can projects this size have financial and Geo-technical miscalculations at the scale that is now becoming evident?

These are perplexing questions that will have to be answered one day, although for now, they must remain mute. That said, we are clearly past that stage when we scratch our heads in consternation and wonder where, what went wrong. For the Bhutanese, it is clear that these projects are nothing more than graveyards into which we must now put to rest our failed hydropower dreams. For India too, they have to accept that as rich as they are, over the long haul, it would be too expensive and an unnecessary act of bravado - with no meaningful returns to gloat over - neither financial nor political, or diplomatic. On the other hand the financial burden would be too great and, simply, meaningless and unjustified.

But for Bhutan, it would be simply, and irreversibly, crippling!

In my view, there is no other way out for the two governments – but to come together and take the painful, but necessary decision. It would be hugely stupid to postpone it any further. For both partners - India and Bhutan - sooner would be less dear.

The Governments of Bhutan and India must get together and take the only sensible decision they can:

DISCUSS THE MODALITIES OF SHUTTING DOWN PHEP-I & II.

If we don't, market forces will do it for us. Failing that, nature will do it for us. And, if that day should come, I can guarantee you that there will be no hole big enough to fit all of our close to one and a half billion heads to hide in, in shame and regret.

There is no complex science involved here - merely the issue of money and nature. India has control over one of them - money. But they are powerless over the other more powerful factor - nature. Bhutan, unfortunately, neither has power, nor control over either of them.

.................. to be continued

How Viable is COST+?

Tenzin Lamsang, writing in his TheBhutanese newspaper of 1st July, 2017 brings to light some bizarre arguments being put forward by the Indian negotiating team, why Bhutan cannot be entitled to a 12.5% upwards revision of the Chukha electricity tariff, after four years of the tariff remaining static.

The Indian negotiating team is apparently already quoting factors such as low tariff in India, as the basis for attempting to deny us a revision in tariff. As I had mentioned in my earlier posts, cost of generation in India is also falling dramatically. So next time round, this is bound to be one more point for contention.

So tell me, how realistic is it to believe that the famous COST+ will still be the basis for the fixation of tariff for electricity exported from PHEP I & II? Particularly when the cost of generation of these two disasters would have crossed Nu.10.00 – 11.00 per unit, by the time they come on stream, if ever? As stated in my earlier post, judging from the recent trend in India, the cost of generation is likely to drop below Nu.2.00 per unit. In a situation such as this, where would our PHEP I & II stand?

What is the likelihood that India may decide, quite sanely if you ask me, that it would be cheaper for them to scrap the whole deal, rather than pay, if it is really true, COST+ for electricity generated by PHEP I & II? Come to think of it, that may be the cheapest way out for India, as well as for Bhutan. In fact that is something I would welcome very much. But indications so far have been that we are hopelessly inadequate in the craft of analytical thinking.

State of Bhutan’s Hydropower Egg Basket

Obviously, Bhutan’s hydropower story is all about the egg and the basket. According to our Economic Affairs Minister, Bhutan has no other eggs, other than the hydropower egg. So, let us take time off to examine how sound our egg is and how capacious is the basket that we hope to put our eggs in. But before I start to crunch the numbers, let me remind you of what Mr. John H. Gerstle, C.E., MNIF, one of the consultants who worked on Bhutan’s First Hydro-power Master Plan, had recommended.

In my work with RGOB, I strongly encouraged the early determination of those rivers and river basins to be designated for hydro-power development, and those to be preserved for environmental, social, cultural, tourism, recreational and other objectives.

Similarly, it was recommended that hydro-power development be concentrated in a small number of river basins, to limit the extent of the impacts and the expense of new infrastructure development required for projects far away from each other. It was expected that such a concentration of hydropower development along some rivers would enable other rivers to be conserved and protected.

These recommendations were made in the reports of the first Bhutan Hydropower System Master Plan so that the consideration could be done at an early stage, before significant investments and commitments would make such decisions more difficult.

NOTE: Contrary to what was recommended, we now have hydropower projects in 4 of our 5 major river basins.

We spend hundreds of thousands of dollars to engage consultants to prepare master plans and project reports – and then go and throw it under the bus, or completely ignore them.

Coming back to the matter under discussion, the general perception is that India is an all-encompassing infinite basket for our hydropower eggs. Few are aware that for the last three years, that basket has been overflowing with all sorts of eggs - thermal, nuclear, hydro, solar, wind, geothermal, biomass, etc.

Some facts about our hydropower egg basket:
India has, for the past three years, been electricity surplus, so much so that early this year, West Bengal Power Minister has threatened to carry coal to Newcastle – he wants to export 1,000 MW of electricity to Bhutan, among other regional countries! India has declared itself net electricity exporter, exporting more than what it imported from Bhutan. Now let us look at some other numbers.

India has a projected peak demand of 173,000 MW. As opposed to that, as of May, 2017, India boasts of an installed capacity of 330,000 MW.

Additional 90,000 MW is in the pipeline.

The Indian story has been that hydro-power’s contribution to the overall electricity generation has been declining steadily. From a high of 45.69% in 1966, the hydroelectricity now contributes merely 13.5% of India’s total electricity generation, as of May, 2017.

A total of 34 planned hydropower projects totaling 23,000 MW remain stalled, because of uncertainties caused by changing market forces and shift in technology, including dangers posed by global warming and climate change.

India no longer recognizes electricity production as critical to its economic advancement. This is because firstly, electricity production is not a big employer and, secondly, it has seen surplus production in excess of its demand, for the past three years.

India is pushing to achieve 100 GW of solar electricity by the year 2022.

Production cost of solar energy in India is set to fall below those of coal (thermal) levels - Nu.2.90 per unit as opposed to current cost of Nu.3.20 for coal.

Power plants in many of the Indian States have resorted to curtailing generation, because of excess supply beyond their needs.

In a single year, the bid for solar power fell from Nu.4.34 to Nu. 2.62 – a drop of 40%. Power companies in India are now offering to charge only Nu.2.62 per kilowatt-hour of electricity generated from solar panels.

Indian States of Odisha and Utter Pradesh have cancelled their bids for 7 Gw and 3.8 Gw power plants, as a result of installed capacity far exceeding demand.

Gujarat has already shelved their ultra-mega plan for 4,000 MW coal power project, on grounds of excess generation.

Caused by falling solar power prices, and excess generation, close to 13 Gw of coal power projects have been cancelled across various Indian States. 34,000 MW of planned production has been scrapped.

Do you see it now? While India is cancelling most of its planned generation, Bhutan is aggressively pushing for more hydropower projects. Is it stupidity? Is it lunacy? Or is it personal greed? To what can you attribute this madness?

Soon our glacial-fed rivers may cease to be qualified as renewable resources, because global warming and climate change grossly hinder their rate of renewal. India is seeing two times the generation they need.

PHEP I & II are monumental disasters, as enterprises of profit. And yet, we say hydro-power is our only egg. As I have said before, it is not the hydropower projects that I am against – it is the manner in which they are done. If we cannot do a good job of it, let us shelve them!

In conclusion, let me leave you with what the World Bank has to say about our only egg:

Bhutan’s hydro-power projects have largely been perceived risk-free, and thus rapid hydro-power investment through heavy borrowing has not caused much concern until recently. Yet available information suggests that the sector’s financial performance has been deteriorating since 2007. The net profit (before tax) per unit of electricity sold has fallen sharply since 2007, driven by rising costs and declining revenue. The sector’s regular contribution to the budget has also declined for the past 10 years, from 6-8 percent of GDP during the early 2000s to 2.7 percent in 2011/12, notwithstanding the significantly increased electricity generation capacity. All this indicates that the sector’s “high commercial profitability” cannot be taken for granted. Should the hydropower sector’s financial performance continue to deteriorate, Bhutan’s solvency could be threatened. Although debt service costs are being borne by DGPC at present, after all, the hydropower debt is the government’s liabilities. The source of the performance deterioration has to be identified, and, remedial actions taken soon to avoid debt service difficulties.

Economic Policy and Debt Department

The World Bank

The World Bank is already worried about our capacity to remain solvent – meaning they think we are likely to go bankrupt!

Credits: Some figures quoted in this post have been derived from the Magazine "ENERGY Towards Sustainability, Justice and Equity" edited by Soumya Dutta.

State of Bhutan’s Hydropower Projects

According to the recent public declaration made by our Economic Affairs Minister Lyonpo Leki Dorji, Bhutan has no other eggs, other than the hydro-power egg. Thus, it would seem like Bhutan’s hydro-power story is all about the egg and the basket. If so, it is important to take time off to examine how really bankable our hydro-power projects are. And, while bringing perspective to our hydro-power projects, by necessity, we must dwell on our two largest ongoing projects – the Punatsangchhu Hydro Electric Projects I & II. Another of Bhutan’s large hydro-power projects – the 720 MW Mangdechhu Hydroelectric Project Authority deserves mention – but for now I will limit myself to PHEP I & II.

Our hydro-power potential
We believe we have 30,000 MW hydro-power potential of which 23,760 MW is said to be economically feasible.

How many of you believe that this is still true and valid, in today’s context? The assessments were made about 3-4 decades back. And, in all likelihood, the assessments would have been made by WAPCOS, the principal Consultants to Bhutan’s disastrous hydro-power projects.

Since the assessments were made, the world has seen severe climate change brought on by global warming. Our region is said to be experiencing warming rates that is 1.5 times the global average, causing huge glacial melt and altering rainfall patterns, which alter water-flows into our rivers. Because of this altered scenario, there is a need for a fresh study to determine our real potential, based on the latest climate data. May be our stated potential could be whole lot of air and not water.

Our claim as a net exporter of electricity
Bhutan is supposed to be a net exporter of electricity, exporting over 1,500 MW of electricity to India last year. But we are energy reliant; infact, we are electricity reliant. We have to import electricity from India during the winter months, at a much higher price than at which we exported to them. The government will tell you that this is in the nature of nature. It may be so, but we know that this is something that can be easily corrected. But we can’t be bothered.

Bhutanese CANNOT afford our own electricity
Even stranger, for a country that lists electricity as an exportable surplus, its citizens find electricity too expensive for use as an energy source for cooking and heating homes. Not out of choice but driven by compulsion, Bhutanese people waste many hours of their productive lives - queuing up at the fuel stations, trying to buy LPG and kerosene, for cooking and heating their homes. And what does the government do? Instead of solving the problem, they attempt to manage and bring some semblance of order to the throng that form at the fuel pumps. Tragic.

Bhutan is unprepared for GLOFs and earthquakes
The storage dams of the PHEP I & II, if they ever get built, will create huge water bodies that could alter weather patterns and trigger major earthquakes. And yet, our Disaster Management Department tells us that we are unprepared, in the event of a large earthquake. Bhutan is located in a seismically hazardous zone and the Great Himalayan Earthquake in our part of the world is said to be imminent. In addition, GLOFs are a clear and present danger, given the rate of ice melt that is recorded in our part of the Himalayan region. Bhutan has close to 2,800 lakes of which 25 are potential GLOFs.

Even if we disregard all of the above, something that we cannot ignore is the fact that the PHEP I & II sits bang in the middle of a seismically high hazard zone. Take a look at the following Seismic Hazard Zone Map of Bhutan released by IIT, Rourkee, India. I am posting a high resolution image of the map so that readers can download and save it; please go ahead and do so – I have gone to considerable trouble and expense to redraw the map.

How plausible is it that the Chairmen of the Board and the Board Members of the past and present PHEP I & II Board did not know of the precariousness of these projects’ location? There should be no doubt in anybody’s mind why these projects keep encountering all manners of “geological surprises”.

Unbridled project cost escalation
From the original cost estimate of Nu.35.00 and Nu.37.00 billion, the final cost of construction of the PHEP I & II is likely to escalate by 400-500% of their original estimate. 70% of the final cost will have to be borne by the Bhutanese people in the form of loans – at a ludicrous interest rate of 10% per annum. And yet the government and the project authorities will tell you that the loans are self-liquidating – as if we are in the business of liquidating loans.

Astronomical per unit cost of generation
If and when the construction of these disasters end and generation starts, we will find that their cost of generation would have shot through the roof and into the stratosphere. As of last year, it is said that the cost of generation at the PHEP I & II has already crossed Nu.4.00 per unit. The project completion date of these projects have yet again been pushed back to 2019 and 2022. You and I know that these dates will yet again be pushed back. This means the cost of generation will be somewhere in the region of Nu.9.00 – Nu.10.00 per unit, if not more. As against that, consider that our Dagachhu Project is said to be having a hard time selling their electricity at Nu.2.90 in the Indian market. But the government and the Project authorities will tell you that the arrangement is “COST+” – implying that cost is not an issue because we will get paid at the rate of COST+. We will have to watch and see if that will be true.

Plunging cost of generation in our only market - India
In a single year, the bid for solar power in India fell from Nu.4.34 to Nu. 2.62 – a drop of 40%. Given that there is a strong push for renewable energy in India, the photovoltaic and wind turbine technologies are bound to make huge strides. As a result, it is most likely that the cost of generation in India will fall far below Nu.2.00 – by the time our disastrous PHEP I & II come on stream. This is the reason why India is now slowly shifting their focus from thermal and hydro plants to renewable energy - because this sector is all set to take on the leadership role.

There are a few hundred things I can talk about on the sad state of affairs surrounding our hydro-power projects. But I won't go into them since most of them have been touched upon in my various earlier posts. For now let us shift focus to what is happening in India, our extended home market for everything, but most importantly, our sole market for our hydro-power egg.

Our Hon’ble  Economic Affairs Minister says that we have no other eggs – other than our hydro-power egg. He sees no other option, than to strive to put our most preferred “egg” into the Indian egg basket. So let us do a realty check on how bankable our hydro-power egg is, and how spacious our Indian egg basket really is.

Next ….. The State of Bhutan’s Egg Basket

We Don't Have Other Eggs

A statement made by our Hon’ble Economic Affairs Minister during a recent BBS Panel Discussion on national debt, left me completely startled! His Excellency was quite categorical that “we don't have other eggs.” Listen to the following:

https://www.youtube.com/watch?v=ZBm1XAUctYY

Clearly, Lyonpo thinks, as a number of other Bhutanese do, that all our other eggs are inconsequential. It is truly worrisome to hear a member of our Cabinet say that we have no other eggs. What he is saying is that nothing else matters, other than hydro electricity. From Lyonpo’s statement, it is obvious that we are so blinkered on hydro electricity that we are unwilling to accept that there are other eggs that do matter, certainly even more than hydro electricity.

Could it be possible that Lyonpo may have, even if unwittingly, given us an insight into the Bhutanese psyche? Could this perhaps explain why so many problems beset modern Bhutan? Could this be the reason why our other eggs have seen neglect and, therefore, made poor or no progress at all?

Could this mentality be responsible for the apathy that we see being shown towards every other problem we have, other than hydro electricity?

The wild animals plunder and pillage our farmers’ crops, while they watch in fear and helplessness. But all that the government can do is come up with a strangely inaccurate coinage. They call it “human-wildlife conflict”. Where the dang hell is the conflict, I want to know? A Swiss woman had recently observed that the wildlife predation into the human habitat has been a problem that remains unsolved for the past 4 decades, since she first visited Bhutan.

They capitulate and they surrender - poor rural folks abandon their ancestral homes and fertile lands and migrate by the droves, to seek and find refuge and respite in the urban centers, a wilderness of a different kind. In the process more than 20% of our villages have now been abandoned, and thousands of acres of fertile farmlands remain fallow. And what do we do? We put all our brains together and coin a brand new word for it - we call it “Goontong” and go about BAU.

We grind it, we dry it, we boil it, we chop it, and we chomp on it. We eat it for breakfast, for lunch, for dinner and for snacks in between. We may puff and we may huff and we may sweat and shed tears while eating it – but it is a food that the Bhutanese eat the most, all life long. Ema Datsi identifies with the Bhutanese more than the upstart GNH. And yet, we have to import 200 truckloads of chilies every year, if need be, by air!

Visitors to the country have been complaining about the dogs barking all night long, for the past many decades (I am in possession of a written record that shows that one American complained about it during Paro Tsechu in April of 1965). This means that this problem has remained unsolved for over half a century. And what do we do? We pool together our collective imagination: we send out a travel advisory – all visitors to Bhutan please bring along earplugs!

The whole of Gaselo hill including the village is at the verge of sliding into the Punatsangchhu because of the destabilization caused by the construction activity of the PHEP I. From its initial estimate of Nu.35.00 billion, the cost has escalated to Nu.97.00 billion as of end last year. By the time the project is done, if at all, the cost is likely to cross Nu.200.00 billion. And yet, our Economics Affairs Minister will tell you that the hydro electricity is the only bankable egg we have. By implication, what he means is that nothing else is important, not our human capital potential, not our agriculture, tourism, cottage industry, mining etc.

In reality, His Excellency the Economic Affairs Minister sorely misses the truth – that his precious egg basket has been brimming with all sorts of eggs for the past three year.

…………….. to be continued: The State of Bhutan’s Hydro-power Projects