India, Bhutan yet to finalize modalities of 600 mw hydropower project; first 50:50 joint venture

Bhutan and India are yet to finalize modalities of the Kholongchhu hydropower project—a 600mw joint project for which the two nations had signed a concessional agreement last year— to start the construction work, Bhutan’s Economic Affairs Minister Loknath Sharma has said

Dec 16, 2021
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India, Bhutan yet to finalize modalities of 600 mw hydropower project

Bhutan and India are yet to finalize modalities of the Kholongchhu hydropower project—a 600mw joint project for which the two nations had signed a concessional agreement last year— to start the construction work, Bhutan’s Economic Affairs Minister Loknath Sharma has said. The 600 MW run-of-the-river project is located on the lower course of the Kholongchhu River in Trashiyangtse district in eastern Bhutan. The project envisages an underground powerhouse of four 150 MW turbines with water impounded by a concrete gravity dam of 95 meters in height. 

The work on the project was expected to start last year after the two governments signed the agreement in June 2020. 

“It is the first joint venture model project and we need to have a clear idea about the project to avoid inconveniences later,” Sharma informed the Bhutanese parliament. The government would take up the matter with the Indian government after the ongoing parliament session in India ends, he said. 

The project, with an estimated cost of around $206 million, would be implemented by Kholongchhu Hydro Energy Limited, a joint venture company formed between Druk Green Power Corporation (DGPC) of Bhutan and Satluj Jal Vidyut Nigam Limited (SJVNL) of India. Under the terms, Bhutanese contractors will build 20 percent of the project and Indians would complete the rest.

Although no work has started on the main project, the support infrastructure like roads, bridges, and housing complex has been built, Sharma confirmed.

On cost escalation due to the delay, the minister said, “If the electricity tariff is increased for industries, there would not be a competitive advantage.” He added that the government has a way forward for the economy to start up with the project ideas that would be dependent on electricity. “The tariff is revised every three years,” he stated. 

So far, India has constructed three Hydroelectric Projects (HEPs) in Bhutan totaling 1416 MW (336 MW Chukha HEP, 60 MW Kurichhu HEP and 1020 MW Tala HEP), which are operational and exporting surplus power to India, About three-fourth of the power generated is exported and the rest is used for domestic consumption, according to India's Ministry of External Affairs.

The Kholongchhu project marks a shift as it is the first time an India-Bhutan hydropower project will be constructed as a 50:50 joint venture, not as a government-to-government agreement, according to The Hindu. The agreement was signed by the two foreign ministers in June 2020. 

(SAM)

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