Monday, 13 February 2012

Bhutan - Hydropower projects to be guided by Country’s Law

In the recent 8th Empowered Joint Group meeting in New Delhi, India it was decided that the joint venture hydro power projects will be carried out as per the country’s law. One of the major demands put forward by the Indian Public Sector Undertakings (PSUs) was that they will not return back the hydropower project free of cost after 30 years. But, after prolonged negotiation it was resolved the projects will be given to Bhutan free of cost in good running condition.

The Empowered Joint Group meeting also decided that the term of ownership of the project will be only for 30 years as per the law of the land. The PSUs demanded the ownership for 35 years. The Indian PSUs had also agreed to pay the 12 % royalty of the power generation to the government during the loan period. After the loan period is over, the PSUs will pay 18 % royalty to the Bhutanese government. It will also pay corporate tax for 10 years after commissioning of the power plants.

Meanwhile, the Indian PSUs will own 51 percent of the projects while 49% will belong to the Druk Green Power Corporation. The PSUs will pump in 70 percent of the 17 billion rupee required to construct the power plans while the remaining 30 percent will have to be managed by Bhutan. Government of India has also agreed to grant the money for Bhutan.

The board of the projects will have equal member from both the sides with a maximum of five members each.The four power projects are the 670 megawatt Chamkarchu in Bumthang, 600 megawatt Kholongchuin Trashiyangtse, and 600megawattWangchu and 180 megawatt Bunakha reservoirs in Chukka. Meanwhile the four joint-venture projects will have a combined capacity of 2,000 megawatt. The construction works of the four mega hydropower projects will begin from end of this year or early next year.

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