Tala Hydropower Plant to liquidate its debt this year

It will contribute Nu 2,568.3mn annually to the government coffer thereafter

Tala Hydropower Plant in Chhukha will liquidate its hydropower debt by this December.

The 1,020 Mega Watt (MW) hydropower plant was commissioned in 2006. By December, Nu 31,559.32mn will be paid back to the Government of India (GoI) by the time the loan is liquidated.

At 9% per annum interest rate, the government had availed Nu 16,503.42mn during its construction. It took 12 years for the project to liquidate the loan.

Now, the hydropower plant will be saving Nu 2,568.3mn annually at Nu 2.12 current tariff rate paid by the Indian government.

“This will improve the cash flow for Druk Green Power Corporation (DGPC) and Bhutan Power Corporation (BPC). However, the impact on the profitability is expected to be very low due to significant reduction in the interest expense due to repayment over the last 11 years,” said DGPC Managing Director (MD), Dasho Chhewang Rinzin.

Meanwhile, the MD said that with the liquidation of loan, the earnings from the power plant will not be used for loan repayment for other hydropower projects as each project is taken up on the strength of its own financial viability. “Each project should earn sufficient revenues to service its own loan,” he said.

The revenues accruing to Bhutan on commissioning of these projects under construction will depend on the tariffs that are negotiated for sale of power to India.

The implementation of the project including creation of basic infrastructural facilities started in October 1997. The main works of the project started in early 1999. The first unit of the project was commissioned on July 31, 2006 despite numerous adverse geological challenges encountered. The extensive damages were caused by the unprecedented rains of 2000. The last unit was added on the bar on March 30, 2007.

In line with the bilateral agreement, the project authority handed over the project to the Royal Government of Bhutan with effect from April 1, 2009 after two years of successful operation and maintenance. Subsequently, the Tala Hydroelectric Project was amalgamated with the Druk Green with effect from April 1, 2009 and was renamed the Tala Hydropower Plant.

The final cost of completion of the project is Nu 41,258.545mn. The GoI has fully financed the project in the ratio of 60% grant and 40% loan repayable in 12 equated annual installments at a simple interest rate of 9% per annum.

Today, the country’s hydropower debt stands at Nu 132.9bn from Nu 54mn in the 10th plan. Lyonchhen Dasho Tshering Tobgay during his visit to the Dzongkhag had mentioned that the hydropower debt of the plant would be self liquidated after its commissioning.

Also, the Mangdechhu project will be commissioned by the end of 2018.

The ongoing projects of Punatsangchhu I and II are expected to take some more time for completion, according to Dasho Chhewang Rinzin.

Meanwhile, the establishment of hydropower plant is also credited to boosting local economy. Apart from the facilities provided like schools and transportation, the project has employed the native residents of the locality according to their capabilities, according to Darla Gup Mil Kumar Mongar. “Local businesses boomed in the gewog during the construction period and people’s lifestyles have improved since then.”

Krishna Ghalley from Phuentsholing