Sunday, March 24, 2019

Chasing The Hydropower Nightmare

As far back as 2015, Bhutan has been ranked as one among 14 other countries that are likely to enter a debt crisis. I do not know if the situation has improved since - but what I do know is that the debt crisis is caused by undisciplined borrowings to do our failed hydropower projects. The debt crisis was further aggravated due to escalating costs caused by delays in completion of these projects. And yet, we are still chasing the hydropower nightmare. Look at what TheBhutanese writes:
The 2,560 MW Sunkosh Hydro Electric Project that we are now pursuing is projected to cost Nu.200.00 billion. Please note: this is only an initial estimate. We all remember that Punatsangchhu Hydro Electric Project I (PHPE-I) was supposed to cost us only Nu.35.14 billion. The cost has now crossed Nu.100.00 billion - and the project is not even half done. The PHPE-I was supposed to be completed in 2016. Its completion deadline has now been provisionally pushed to December, 2022. My fear is this project can never be done - notwithstanding the recent appeal for divine intervention.

Yet again, the RGoB is pushing for the same lopsided funding model that is currently in vogue: 70% loan and 30% grant at an interest rate of 10% per annum. And, most likely, the repayment schedule will be the same as we have agreed in our earlier projects: 12 months after generation starts. I do not know why we are agreeable to such terms - after all, through thick and thin, we have been India’s most trusted and staunchest ally. Look at the terms our best friend India is getting from Japan:

Project               : 508 KMs Mumbai-Ahmedabad Bullet Train project
Loan amount     : Rs. 880.00 billion
Payback Period : 50 years - starting after 15 years as of 2017
Interest Rate      : 0.10%

If one were to look closely at the prevailing energy scene in India, our investment in this sector should not make any sense - the danger signs are palpable. We will sink!

India is now the world’s third-largest electricity producer.

India’s push towards electricity generation from renewable energy sources is unmatched - it is all set to achieve generation of 100 GW by 2022, from solar energy alone.

Mercom India Research puts India’s total installed wind power capacity at 35.288 GW, as of 31 December 2018.  This ranks India as the fourth largest producer of wind power in the world.

India’s Central Electricity Authority (CEA) estimates India’s total installed capacity as of January, 2018, as follows:

Sate Sector             84,637
Central Sector      104,039
Private Sector      161,487

TOTAL         350,162.00 MW

India will increase another 15,006 MW of electricity in the next few years, as follows:

With all the above, how does hydropower projects make sense to Bhutan? All indications are that India will be energy surplus in the next 2-3 years.

India is now all set to sell electricity to Bhutan, not buy from us.

1 comment:

  1. I was sharing with someone high-level why we couldn't mobilise some money from our own 5 banking and 3 non-banking financial institutions, at a lower interest rate, to repay the debt part of the GOI's malicious assistance program to us ... or economists think it's the time value of money that will matter?