Friday, July 14, 2017

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:


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

Monday, July 3, 2017

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.