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Our economic fortune, energy security, national sovereignty and hydropower are inextricably linked. This critical linkage needs to be understood and appreciated in the broader context of our future in the new Asian Century.

Our only power – hydropower

Our economic fortune, energy security, national sovereignty and hydropower are inextricably linked. This critical linkage needs to be understood and appreciated in the broader context of our future in the new Asian Century. If we wish to be an active participant, and not just a mere spectator, in the Asian economic firework that is in the offing, then we should focus on our only power – hydropower.

A growing clean energy economy, a rising India, a fully integrated regional grid and the birth of regional energy frameworks – such as the BIMSTEC and SAARC Framework for Energy Cooperation – offer huge scope and opportunity for our growth. If we want to become more relevant and less expendable, we have to inevitably rely on a reasonable pace and scale of smart, sustainable hydropower development that is not only commensurate with our capacity but takes advantage of our uniquely advantageous position.

Obviously, hydropower is a difficult choice. It is not going to be easy, not least when it has to be smart and sustainable. It will be laden with apprehension, risks, and of course, the naysayers. It will not be a straightforward business, especially in our case where we have to juggle our economic interests and strategic consideration. There will be conflicts and issues. But we are better off when we focus on the real goals instead of imagined problems.

We don’t have to be reckless or unreasonably aggressive. We can pursue a reasonably accelerated smart hydropower, as conscientiously as we can, while at the same time making investments in energy efficiency since efficiency improvements complement generation. Our hydropower pursuits should be neither too much too soon, nor too slow that we miss the window of opportunity.

But how fast are we really going?

In the last 25 years or so, since we had our first major hydropower plant, we have managed to add about 1,500 MW of installed hydropower capacity till date. Given our huge potential of 30,000 MW, this translates into a dismal achievement of 60 MW per year. At this rate, it will take us 500 years to realise our full potential, while Norway took just 100 years to do so. The annual hydropower capacity addition in some neighbouring countries are: China, 2,400 MW; India, 450 MW; Myanmar, 90 MW; and Nepal, 20 MW.

If we are aiming for 10,000 MW by 2020 – which is impracticable – it will ramp up our annual capacity addition to about 240 MW, which is a whopping 300% leap from the existing level. That’s almost like two-thirds of Chhukha every year. Perhaps we should settle on something halfway between our existing 60 MW and the ambitious 240 MW as the rate to ride to harnessing our full potential.

Norway’s hydropower is a huge success story. Its industrialisation was driven by hydropower. Today, Norway has an installed capacity of 30,000 MW, which is 60% of their total potential, and they haven’t stopped. They have invested in developing their hydropower resources. They have also invested in efficient, environment-friendly practices and in developing their hydropower expertise. They are a world leader in hydropower today and the 4th happiest nation on earth.

We should tread the same path.

Unfortunately, our hydropower pursuits have been run down by voices both from outside and inside that have painted an all-gloom-and-doom picture of it. Consequently, wafts of anti-hydropower sentiments, especially with regard to the new projects, are getting heavier. Perhaps its time the government reaches out to the people and raises awareness about the truth.

We have been through this before. Our Kurichhu hydropower plant has been a plump target for putting the blame on for nature’s fury every time summer rains flood the plains across the border. The same allegation has been leveled once again recently by a foreign writer, who has urged Bhutan to have a “rethink” about its hydropower pursuits. However, most of his arguments are not cogent and oftentimes misleading.

For example, the writer urges us to “pause” our hydropower pursuits because climate change poses a threat to our hydropower in the form of “higher flood risk from extreme weather events and GLOF risk,” among others. What he conveniently ignores is the fact that thermal plants in his own backyard are behind all these. He should be opposing these dirty thermal plants, which are causing our glaciers to melt, and not hydropower in Bhutan, which will pump clean energy into his backyard and help displace the thermal generations that will save our glaciers and rivers.

Perhaps we should worry less about such exhortation and more about how best we can pursue smart hydropower so that it contributes to addressing climate change issues while at the same time meets our national aspirations for a prosperous future. We have the natural resources to become a global leader in this.

Perhaps we should worry less about the googobs of generous investment money making their way into our hydropower and more about a possible lack of investment. If we are so inept at handling the consequent macroeconomic issues, we should be questioning our economic mismanagement and not our pursuit of smart hydropower.

Perhaps we should worry less about a debt for an investment that has a huge, guaranteed payoff and more about managing our reckless credits in other sectors.

The IMF’s 2014 Country Report on Bhutan helps allay debt fears wherein it states: “Bhutan’s risk of external debt distress is moderate due to the presence of unique and strong mitigating factors. These factors are primarily the explicit guarantees from India that cover financial and construction risks for the hydropower projects.” Such reassurances along our strong track record of project implementation, as also noted by the IMF, particularly in the power sector, should give us more confidence.

Our hydropower projects are major infrastructure investments and therefore naturally replete with health and safety risks that present difficulties that are not easy to predict. There is not one hydropower project that doesn’t have a natural cost overrun. We cannot be overzealous about cost overrun yet expect our dams to most environmentally friendly. If want the best, it is going to cost us. Genuine cost escalation, although undesirable, should be acceptable in hydropower. Cost minimisation, although desirable, should be secondary; we cannot afford to be penny wise and pound foolish in this business. It is for this reason that a state-led hydropower development approach, as we have it now, is always the best and we must continue that way.

Hydropower on its own will not create many jobs. It will create more jobs in two ways: firstly, through the supply chain once we have the expertise; secondly, by powering up the engine for our growth, the private sector. The private sector has to take up the baton of economic diversification and create jobs. Sadly, hydropower and more hydropower are being blamed as threats that will send our industries out of business. “High” domestic tariff is all grist to the mill of those who are pessimistic of our private sector’s role to complement our hydropower pursuits.

Our domestic tariffs have remained competitive in the region and internationally, too, for a long time. The existing BEA approved average tariffs for high voltage and medium voltage are Nu 2.16/unit and Nu 3.13/unit, respectively. For the same category, the tariffs in our neighbouring countries are: India, around Nu 7.46/unit; Nepal, Nu 6.14/unit; Sri Lanka, Nu 6.01 /unit, Pakistan, Nu 6.8/unit; and Bangladesh, Nu 3.56/unit. These are 2010-11 figures so they could be higher today.

We cannot have the hydropower cake and eat it too. Hydropower projects will always come with negative impacts like any other project, and it should therefore be a cause of concern for any educated citizen. But as long as we pursue smart hydropower that is harnessed on a sustainable basis at the right pace and scale, the resulting inexorable, negative impacts are a price we pay for our march towards prosperity.

Repercussions of pursuing hydropower from hereon in will have to be viewed holistically and weighed carefully, not just from the standpoint of it happening but as well as it not happening. For any project, the community that is directly affected by it and whose people who are at the coalface of their local economy should have the final say, not a few who have access to the Internet.

The need of the hour is to break the rigid silos and nurture a sustained national commitment to achieving our national goal of developing our hydropower resources as soon as we can, as much as we can, and as harmlessly as we can.

Building hydropower projects is not easy. But when it has been made easy why make it hard.

Contributed by 

Dorji Tshering

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