Great white hope
Bhutan is building a dozen hydel dams to pump up its economy, but is yet to assess their impact
With steep mountains, deep gorges and numerous fast-flowing rivers, Druk, literally the land of Thunder Dragon, has set its sight on becoming a powerhouse in South Asia. Bhutan has already proved its potential—hydel plants have lit up nearly every Bhutanese home, irrespective of their location in the rugged mountain terrain. In 1999, only a quarter of households had electricity.
“It is white gold for Bhutan,” says Chhewang Rinzin, managing director of state-owned Druk Green Power Corporation. With a potential to harness 30,000 MW from its rivers and streams, hydropower is now a great white hope for “green” income from selling power to India.
Bhutan’s first tryst with hydropower was in 1967, when it built a 360 kW dam on the Samteling chhu (river) flowing by the capital city, Thimphu. “It started producing hydropower on a commercial basis only after 1974, when India offered to develop its hydropower sector and financed its first mega project, the Chukha plant,” says V P Haran, India’s ambassador to Bhutan. The country now has a mix of small, mini and mega hydel projects, which together generate 1,416 MW. Bhutan consumes 300 MW and sells the rest to India.
“India’s hunger for power has helped Bhutan expand its GDP by 8.6 per cent from 2008 to 2012,” says Rinzin. By 2020, Bhutan aims to generate more than 12,000 MW (India’s Tehri dam, one of the tallest in the world, generates 1,000 MW) from its four major river valleys. About 10,000 MW will be generated under a bilateral agreement with India, which will buy a major portion of this power. Construction work has begun on three projects—two on the Punatsang chhu and one on the Mangde chhu—which will harness 2,910 MW. Another six mega-projects and over a dozen of small and medium plants are in the pipeline (see ‘Powerhouse in a...’). Bhutan hopes that exporting hydropower will earn it the much-needed capital to finance social projects and achieve economic self-reliance. But the size and number of these projects have raised both financial and environmental concerns.
Gross national worry?
The costs of Punatsangchhu I and II, for instance, have escalated by two and three times, respectively, since work began in 2006. About 50 per cent of this escalation is due to inflation and will be funded by additional loans from India. Worse, India has changed its financing strategy. Earlier, India used to finance Bhutan’s hydel projects with 60 per cent grant and 40 per cent loan. Lately, it has been offering 70 per cent as loan. This raises fears of debt trap.
Allaying these fears, R N Khazanchi, managing director of Punatsangchhu Hydropower Authority, says India will buy power from the projects under construction at a tariff of Nu 3.4 per unit (ngultrum is tied to Indian rupee), which is much higher than the tariff of Nu 2 that India pays for power from the Chukha plant and the 1,020-MW Tala plant in Chukha dzongkhag (administrative division also known as district). These two plants are churning out profits. In 2008, Tala alone generated Nu 810 crore worth of power of which Nu 264 crore was sold to India to repay the loan and Bhutan retained Nu 550 crore. Khazanchi assures that even in the worst-case scenario where a project is 100 per cent debt-funded and there are cost overruns, Bhutan will make a net profit of 25 per cent.
But what about the impact of several mega dams on the young and fragile Himalayan region? The country’s intelligentsia says the government’s push to become powerhouse of the region is at odds with its principle of environmental protection. In March this year, national newspaper Kuensel carried an editorial saying, “While no one disputes that harnessing hydropower is the way to go, there is a concern that Bhutan is trying to do too much, too soon.” The government is yet to conduct a cumulative impact assessment of the projects.
Punatsangchhu I and II, for instance, are being built on the same river. This could severely restrict the river flow, especially in the winters when the river carries 10 per cent of the monsoon flow due to snowcapped mountains. “Landslides are frequent in the Himalayan ecosystem, which makes construction risky,” says Ugen Lhendup, coordinator of the Royal Society for Protection of Nature’s (RSPN’s) environment education and advocacy programme. “We have to preserve its stability, else we will have to spend more on disaster mitigation,” says Lhendup, adding that some of the construction work is sloppy. He suggests that projects need to be staggered to mitigate their effects on forests and soil.
Chime Wangdi, secretary general of non-profit Tarayana Foundation, offers another reason the government should stagger hydel projects. Since most projects are implemented by other countries, especially India, and international organisations, there is a great influx of foreign workers. This results in competition with local communities for the limited natural resources. Since work began on Punatsangchhu, an estimated 5,000 foreign workers have arrived in Punakha, a small town 13 km away. This is double the population of Punakha. “The town has changed completely. There is congestion, more buildings and cars now,” says Sonam Tashi, professor at College of Natural Resources in Punakha.
Punatsangchhu projects have also affected wildlife, says Lhendup. RSPN’s study of the impact of the projects on white bellied heron, a critically endangered bird, shows the bird’s population has reduced to 20 from 200 in 2006. No hatching has been reported this year. Other mega hydel plants have affected the population of mahseer by blocking their seasonal migration for breeding. The dams are too large for fish ladders. Quarrying for rock, roads and house-building have also affected the fragile ecology. Hydropower is Bhutan’s asset, says Ugyen Tshewang, secretary of the National Environment Commission (NEC). “It is cleaner than thermal and is more in line with GNH.” Though Bhutan has a coal reserve of 1.3 million tonnes, it mines barely 1,000 tonnes a year for household use. Lam Dorji, executive director of RSPN, says since all hydel plants are run-of-the-river projects, displacement and submergence are minimal.
Environmental conservation need not be an impediment to economic development, says Ugyen Tsechup, president of Bhutan Chamber of Commerce and Industry. For this, Tsechup suggests, the government should improve monitoring and conduct environment impact assessments. There is also an urgent need to expand NEC, he adds.
Tsechup, however, holds a grudge against the monopoly of Indian companies and workers in the hydropower sector. Work that can be done by Bhutanese companies should be contracted to them with India transferring the knowhow, he says.
Tsechup is right. Bhutan needs to take stock of the way it is going ahead with hydel projects. Otherwise, it may end up lengthening one leg of GNH while shortening the others.
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