The total cost of the project is Nu 110,960mn or USD 1,387mn at 2022 price level that is being updated under the DPR
The Detailed Project Report (DPR) of the long-awaited 1,125-megawatt Dorjilung hydropower project in Dorjilung, Mongar is scheduled for completion by March this year.
Druk Green Power Corporation (DGPC), in association with M/s Energy Infratech Private Limited of India started preparing the DPR of Dorjilung hydropower project in 2015.
An official from DGPC said that the DGPC is currently updating the DPR including the environmental and social impact assessment to align the DPR to the standards of Bhutanese Guidelines for Development of Hydropower Projects 2018 which came into effect after the DPR was prepared.
In addition, the official said that the up-gradation of the DPR is also to reflect international best practices and thereby to make the project bankable for international financing. The Royal Government of Bhutan (RGoB) received USD 4.0mn from the World Bank to update the DPR.
The DPR update is being taken up through two international consulting firms; Studio Pietrangeli of Italy (for technical DPR update) and Artelia of France (for environment and social impact assessment update ESIA). The works done by two consulting firms in collaboration with DGPC are being reviewed by the Panel of International Experts, according to the DGPC.
“The DPR update is scheduled for completion by March 2024,” the official said, adding that, the World Bank is providing an additional USD 0.5mn for analysis of various options that could be considered for financial closure.
The total cost of the project is Nu 110,960 mn, equivalent to USD 1,387mn at the 2022 price level that is being updated under the DPR excluding financing costs, especially in terms of the accrued interest.
“The project is being planned to be financed through debt equity ratio of 80:20,” the official from the DGPC said, adding that the financial structuring of the project is being carried out with the support of the World Bank, including identifying suitable project modalities, financial and risk-mitigation instruments, and financing options.
For instance, the financial structuring assessment is aimed at allowing Bhutan to maximize its fiscal benefits from hydropower export while also maximizing cost-effective domestic electricity supply.
According to the DGPC, it is expected that the financial closure of the project could be reached through this assessment by December 2024 and enabling the commencement of the project implementation by first half of 2025.
Retrieving on whether the project will be executed tri-laterally with Bhutan, Bangladesh, and India, the official said that considering the huge size of the project and fund requirement, the World Bank has been requested to take a lead in structuring the project financing.
“The Dorjilung project has a huge potential in achieving regional energy cooperation,” the official said, adding that, with the idea of selling some of the surplus power to Bangladesh, the idea of a trilateral arrangement was being broached and still could be an option.
“DGPC is also considering a strategic partnership to facilitate debt financing and sale of surplus power,” the official said.
Meanwhile, the implementation modality of the Dorjilung hydropower project is expected to be innovative and reflective of international best practices.
“The DPR update through international consulting firms is being undertaken using the latest state of the art software and best international practices conforming to international standard codes,” the official said.
In addition, the official from the DGPC also shared that the construction methodologies are being reviewed to incorporate technologies and mechanize the construction thereby reducing manual efforts and expediting the construction processes.
“Design of civil structures and electro-mechanical equipment are also being reviewed to optimize the cost and to ensure full automation of the power plant with latest technologies,” said the official.
The official shared that the implementation of Dorjilung hydropower project will serve both domestic demand and regional electricity trade, wherein the hydropower will also bring in revenues from export of surplus energy.
“The development and implementation of the project will provide employment and economic opportunities to Bhutanese people including market to the local products and nearby business communities,” the official said.
Additionally, a local development plan indicating activities to be implemented and financed as part of the project is also being prepared as part of the DPR update with the aim to bring development benefits to the broader communities in the project area.
According to the official, the project faces enormous challenges including huge investment requirements and conditions of financial institutions, amongst others, and the need for continued capacity building to support DGPC and hydropower sector to ensure a sustainable future for hydropower development.
reverses the Total Fertility Rate (TFR) from 1.9 to 2.1.
Sherab Dorji from Thimphu