Another ray of hope has appeared for the 1,125 megawatt (MW) Dorjilung hydropower project, with the Organization of Petroleum Exporting Countries (OPEC) considering to join the consortium of donors involved in the Dorjilung project. OPEC will be joining the donor coordination meeting, which is scheduled to take place in Thimphu, Bhutan, next month (July 2023).
This announcement was made through a joint statement following the visit of Prime Minister Dr. Lotay Tshering to Vienna, Austria, where he attended the OPEC fund development forum on June 20, 2023. The joint statement stated that the inclusion of the OPEC fund in the donor coordination meeting highlights the growing importance of Bhutan as a potential partner in the global energy sector.
To be constructed in Monggar, eastern Bhutan, the total estimated fund for the project is Nu 119 billion (bn) (USD 1.4 billion). Due to the magnitude of funding required, the World Bank had advised the Bhutanese government for consortium funding, with the Bank committing USD 300 million. When asked about the project during the ongoing parliament on June 20, 2023, Lyonpo Loknath Sharma, Minister of the Ministry of Energy and Natural resources (MoENR), had said that ongoing discussions are taking place with organizations such as the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) for consortium financing, to fill the gap of funds required.
Consortium financing refers to several lending institutions grouping together to jointly finance a single borrower. The project’s funding will be obtained through consortium finance involving multiple organizations.
Seen as a catalyst for regional development and meet the country’s energy needs, completion of the ground work of the project by 2023 was one of the key promises made by the ruling government’s National Assembly (NA) Member of Parliament (MP), Karma Lhamo during the by-election held in June 2021. However, the project has faced delays in the formulation of the Detailed Project Report (DPR).
Lyonpo Loknath Sharma, attributed the delay to the outdated nature of the previous DPR, conducted in 2015. He emphasized the need for a comprehensive and well-coordinated plan to ensure the success of the Dorjilung project. The MoENR is currently working with Druk Green Power Corporation Limited (DGPC), along with a panel of experts from France and Italy, to update and finalize the DPR.
The DPR serves as a comprehensive outline of the project, detailing key information such as the necessary resources and tasks to achieve success. Lyonpo Sharma emphasized the importance of learning from past experiences, such as the Kholongchu project, and taking time to develop a robust DPR for the Dorjilung project. The completion of the updated DPR is expected within the next 8-9 months. Additionally, the World Bank has contributed USD 4 million towards the consultation process for the DPR.
The first report on the Dorjilung project was conducted in 2015. However, a more accurate Detailed Project Report (DPR) needed to be conducted to understand the current situation, budget, and required technologies.
According to the 2015 DPR of Dorjilung, the project could be completed with approximately Nu 74 bn. However, as the DPR is currently being updated, taking into consideration all factors, the budget for the project now stands at Nu 119 billion (USD 1.4 billion), as stated by the Minister of (MoENR).
“The budget of Nu 119 bn is a significant amount, and we will not be able to complete the project with a single source of funding. However, the World Bank has committed USD 300 million for the project,” Lyonpo said. He further mentioned that the remaining funds would be financed by various organizations.
The Dorjilung project aims to generate 1,125 Megawatts (MW) of power on the Kurichhu River, a major tributary of the Drangmechhu River basin that flows into India.
Minister Loknath Sharma also emphasized the substantial cost of the project, estimated at Nu 119 bn and stressed the need to secure funding. He stated, “Considering the project’s scale, multiple sources of funding will be necessary. Although the World Bank has committed USD 300 million to the project, this amount falls short of the estimated total cost of USD 1.4 billion.”
“As a result, the project funding will involve consortium financing with the support of the World Bank,” added the Minister.
“To bridge the funding gap, ongoing discussions are taking place with organizations such as the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) for consortium financing,” Lyonpo said.
The meeting aims to foster collaboration between various organizations, including the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA).
In a recent press release from the Prime Minister’s office, it was announced that the OPEC Fund is actively engaged with Bhutan in financing the Gamri-I (45 MW) and Begana (25 MW) hydropower projects in Thimphu.
Mini Hydro power projects to achieve energy self-sufficiency.
Meanwhile, in a bid to achieve energy self-sufficiency and enhance its energy security, Bhutan has embarked on a series of small hydro-power projects. The country, which often imports power from India during winter months due to increase in demand especially, aims to reduce its reliance on external sources and boost economic activities through these initiatives.
Located in the districts of Lhuntse, Zhemgang, and Haa, the small hydro-power projects will have a combined generation capacity of 104 megawatts (MW). The Managing Director of the Druk Green Power Corporation (DGPC) in an earlier interview with the paper highlighted the importance of these projects, stating that they are crucial steps towards achieving energy self-sufficiency and fostering economic growth in the country.
The initial stage of the small hydro-power projects will involve the construction of two key facilities. The Burgangchhu plant, with a capacity of 54MW, will be located in Nangkor gewog, Zhemgang. The Suchhu Project, an 18MW plant, will be situated in Sangbaykha gewog, Haa. Currently, construction is underway on roads leading to the powerhouse and intake areas at these two sites.
Once completed, these three projects are estimated to produce approximately 494 million units (MU) of energy per year. The total cost for their completion, projected to be in 2025, is estimated to be around Nu 9.2 bn.
Hydroelectric dams generate power by releasing reservoir water through turbines. However, during droughts or periods of reduced rainfall and snowfall, reservoir levels decrease, leading to lower water flow and a decline in hydroelectric power production. As Bhutan relies heavily on hydro-power, primarily through run-of-the-river projects, these factors have a direct impact on electricity generation in the country.
During the winter months, the flow of water in rivers and streams decreases due to reduced rainfall and freezing temperatures, as explained by the DGPC. This leads to a decrease in hydroelectric power generation capacity, resulting in a shortfall in electricity production. Additionally, increased domestic energy demand during the colder season, driven by the use of electric heating systems and longer lighting hours due to shorter daylight, further exacerbates the situation.
Meanwhile, these projects, along with others such as the 85MW Jomori in Jomotshangkha, Samdrup Jongkhar, and the Gamri-II project in Sakteng, Trashigang, have been shortlisted for feasibility studies under Phase II of the small hydropower projects.
Additionally, the 18MW Druk Bindu-I and 8MW Druk Bindu-II projects in Tendruk, Samtse, are also part of the country’s plans for expanding the hydro-power capacity.
Tshering Pelden from Thimphu