One At A Time, Please!

February 5 | Business Bhutan
Editorial

After missing several deadlines, the much awaited 720MW Mangdechhu Hydroelectric Project (MHPA) is finally readying for commission. The last deadline for MHPA commission was January 10.

The MHPA, which took six and half years to complete, was built at a total cost of Nu 49.83bn. Once fully operational, MHPA will bring in substantial revenue through export of surplus electricity, boosting socio-economic development in the country. And once the hydro loan is paid off, the revenue earning from the project would only increase.

Bhutan has a huge hydropower potential with an estimated 30,000MW that can be feasibly harnessed. The harnessing of this abundant hydropower resource is not only pivotal, but necessary too.

However, one question that deserves deep reflection and reckoning is what should be the desired pace of development in the hydropower sector?

Starting 2008, the new elected government started some sort of a fanatic race in developing hydropower projects in country. Rightly termed ‘Accelerated Hydropower Development’ many mega hydro projects were initiated at the same time. The goal was to generate 10,000MW of electricity by 2020.

However, such ambitious targets have been marred by poor delivery, gross miscalculations and terrible mistakes. And all of these, now increasingly appear, will dearly cost our government and country. Delays and cost escalations in hydropower projects would have a looming impact on Bhutan’s external debt and long-term economic sustainability.

Accelerated hydropower development was perhaps never a good idea. And the current Prime Minister has expressed his doubts and reservations on how pursuing mindlessly on this journey could be a disaster for the country.

Talking about the recent development in hydropower sector, particularly vis-à-vis the Punatshangchhu I fiasco, the Prime Minister has raised questions on how a joint-venture project that was supposed to benefit the country no more holds the same promise now. The Prime Minister’s rationale was based on how the project that was supposed to have completed in five years is taking beyond 15 years, and the project that is supposed to have completed with Nu 30bn is now touching Nu 100bn.

We have every reason to be worried. There have been significant delays in ongoing projects such as Punatshangchhu I and II. PHPA I is delayed by more than five years and the PHPA II by more than two years. The cost of PHPA I has escalated from Nu 34bn to Nu 100bn so far. The country has reportedly borrowed Nu 69bn from India to finance its ongoing hydro projects. Further delays would only increase external debt and lead further loss through revenue foregone.

In this wake, our hydropower policies need a serious relook.

With huge borrowings and debt burden, is it even sustainable for the country to keep up with the pace at which hydropower development is being pursued today? Until recently Bhutan pursued a measured pace of development- thanks to the wise and enlightened leadership of our Monarchs.

Fast-forward into the era of democracy, elected governments have been fast tracking development partly to fulfill their ambitious pledges. And that’s exactly what happened with accelerated hydropower development. Rest is history.

What have we learnt from this failure or mistake, if anything at all? Should we mindlessly pursue hydropower development that we overlook fundamental issues of planning? Or should we take up projects one at a time, finish one and then jump onto the other? Well, as they say, a bird in hand is worth two in the bush!

https://www.businessbhutan.bt/2019/02/05/one-at-a-time-please/

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