Bhutan: Green Power Development Project

Sovereign Project | 37399-013

Summary

The Green Power Development Project has two components: (i) regional clean power trade, and (ii) renewable energy access for the poor. Under the first component, the Dagachhu hydropower development (a 126-megawatt [MW] run-of-river type) aims to export power from Bhutan to India through the existing grid to India. The rural electrification component will provide access to electricity sourced from hydropower to 8,767 households and facilities with grid extensions, and electricity sourced from solar energy to 119 remote public facilities (e.g., schools, health clinics, and other community facilities) on an off grid basis.

The Dagachhu hydropower development will be promoted by a joint venture company between Druk Green Power Corporation (DGPC) in Bhutan and Tata Power Company (TPC) in India through a public private partnership (PPP). The rural electrification component will be mainly served by Bhutan Power Corporation (BPC), a public utility service company.

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Consulting Notices

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Procurement Documents


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Project Name Green Power Development Project
Project Number 37399-013
Country Bhutan
Project Status Approved
Project Type / Modality of Assistance Grant
Loan
Technical Assistance
Source of Funding / Amount
Grant 0119-BHU: Green Power Development Project
Asian Development Fund US$ 25.28 million
Loan 2463-BHU: Green Power Development Project
Ordinary capital resources US$ 51.00 million
Loan 2464-BHU: Green Power Development Project
Asian Development Fund US$ 29.00 million
TA 7157-BHU: Promotion of Clean Power Export Development
Regional Cooperation and Integration Fund US$ 888,000.00
Technical Assistance Special Fund US$ 600,000.00
Loan 3034-BHU: Green Power Development Project - Additional Financing
Asian Development Fund US$ 39.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Partnerships
Private sector development
Sector / Subsector Energy - Energy sector development and institutional reform - Large hydropower generation
Gender Equity and Mainstreaming No gender elements
Description

The Green Power Development Project has two components: (i) regional clean power trade, and (ii) renewable energy access for the poor. Under the first component, the Dagachhu hydropower development (a 126-megawatt [MW] run-of-river type) aims to export power from Bhutan to India through the existing grid to India. The rural electrification component will provide access to electricity sourced from hydropower to 8,767 households and facilities with grid extensions, and electricity sourced from solar energy to 119 remote public facilities (e.g., schools, health clinics, and other community facilities) on an off grid basis.

The Dagachhu hydropower development will be promoted by a joint venture company between Druk Green Power Corporation (DGPC) in Bhutan and Tata Power Company (TPC) in India through a public private partnership (PPP). The rural electrification component will be mainly served by Bhutan Power Corporation (BPC), a public utility service company.

Project Rationale and Linkage to Country/Regional Strategy

Bhutan has substantial clean and renewable hydropower capacity. Theoretical potential hydropower is 26,760 MW, of which only about 6% is being used. Of the total 1,500 MW installed, 80% is exported to India after meeting domestic consumption. Power exports account for the largest source of Government revenue in the form of taxes and dividends from hydropower companies. Despite the nations being net power surplus for export, most rural residents do not have access to electricity. Only 40% of rural households use electricity as their main source of lighting as compared to 96.4% of urban households. Expansion of rural electrification will provide access to more remote rural areas where the costs of investment, operation, and maintenance will be higher due to low population density and unfavorable terrain.

Since about 70% of the population lives in rural areas, electricity for all is a significant implementation challenge. Operating subsidies are essential to ensure the sustainability of expanding rural electrification. In Bhutan, subsidies are regulated and provided from royalty revenues yielded from power exports to cross-subsidize electricity prices, in particular for rural domestic customers. The Government distributes the remaining power export revenues to support socioeconomic goals, such as health and education, as well as infrastructure development, e.g., rural roads and bridges. Thus, rural electrification and hydropower export are strongly interrelated with inclusive economic growth and poverty reduction. Expanding generation capacity for export and rural access to electricity will enhance energy and social security.

The Government aims for (i) 100% electrification by 2013, and (ii) an additional 10,000 MW of hydropower development and trading by 2020. In rural areas, electricity from hydropower and solar sources will replace kerosene and fuelwood. Given the coal-dominated Indian power market, clean energy development for power export will promote low-carbon energy sources and foster economic cooperation in the South Asia region.

Accelerating the development of hydropower for export is of strategic significance for Bhutan's economy. Given the Government's limited fiscal capacity for large infrastructure projects, the hydropower development strategy is to leverage public and private investments through private participation in development projects. This approach is expected to accelerate hydropower development, and generate income for more socioeconomic development. To promote the country's strategy, the project preparatory technical assistance (TA) supported the Government in establishing a policy and institutional framework for public and private participation in hydropower development. The Dagachhu hydropower development is a demonstration PPP facility in line with the Hydropower Development Policy, which is to promote private and foreign investments for hydropower generation in Bhutan. Further TA support will be provided to develop Government capacity for hydropower export.

Impact Sustained inclusive economic growth through promoting cross-border power trade and electricity access.
Project Outcome
Description of Outcome Expanded coverage of clean power development
Progress Toward Outcome --Ongoing
Implementation Progress
Description of Project Outputs

Dagachhu Hydropower Development and Rural Electrification

Attached CDTA: Promotion of Clean Power Export Development

- Capacity Building for hydropower

- Financial structuring study for medium-size hydropower projects

- Preparation of documents for carbon finance

Status of Implementation Progress (Outputs, Activities, and Issues)

One of the two 63 MW turbines has been commissioned in February 2015, after the successful testing was carried out. The second 63-MW turbine is expected to be commissioned soon, and this 126 MW hydropower plant is going to be in full commercial operation during the coming monsoon season from June 2015.

All the construction and Electrical & Mechanical (E&M) works have been completed.

Ongoing

Geographical Location Bhutan
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The environmental impacts of the rural electrification infrastructure proposed by the Project were assessed by IEE in accordance with ADB's Environment Policy (2002) and Environmental Assessment Guidelines (2003). The overall conclusion is that through implementation of the mitigation measures, no significant negative impacts will result from the location, design, construction, or operation. The environmental management plan has properly been implemented.
Involuntary Resettlement A short resettlement plan was prepared to guide the acquisition of land (the land-for-land option was chosen by all affected people who have already identified the land they wish to be awarded) and the compensation for the loss of crops. The resettlement plan was implemented accordingly.
Indigenous Peoples No indigenous people will be negatively impacted.
Stakeholder Communication, Participation, and Consultation
During Project Design All relevant stakeholders, including affected communities and affected people, were fully consulted during project preparation. Development of the Dagachhu hydropower component considered affected peoples' concerns and preferences during finalization of the design, particularly the alignment of access roads to minimize negative impacts, while maximizing benefits. They were consulted to define appropriate compensation rates and a course of actions including scheduling, and were requested to select cash compensation or the alternative land to be awarded as replacement for the land acquired by the Dagachhu facility.
During Project Implementation Public consultation with stakeholders continues throughout implementation of the Dagachhu hydropower component.
Business Opportunities
Consulting Services Not required.
Procurement

1. Engineering and Civil works for the Dagachhu hydropower component through ICB in accordance with the ADB's Procurement Guidelines (2007, as amended from time to time).

2. Procurement of materials for rural electrification following ICB. All construction works and material transportation are to be outsources through national competitive bidding.

Responsible ADB Officer Takeshi Shiihara
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Druk Green Power CorporationMr. Chhewang Rinzinchhewang@druknet.btThimpu, Bhutan
Timetable
Concept Clearance 31 Oct 2007
Fact Finding 05 May 2008 to 23 May 2008
MRM 01 Jul 2008
Approval 29 Oct 2008
Last Review Mission -
PDS Creation Date 26 Sep 2008
Last PDS Update 20 Mar 2015

Grant 0119-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Oct 2008 13 Feb 2009 21 Apr 2009 31 Dec 2013 28 Feb 2014 28 Feb 2015
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 25.28 Cumulative Contract Awards
ADB 25.28 29 Oct 2008 24.01 0.00 95%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 29 Oct 2008 24.01 0.00 95%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - - - Satisfactory

Grant 0141-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Dec 2008 13 Feb 2009 21 Apr 2009 31 Dec 2013 - 02 Apr 2014
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.00 Cumulative Contract Awards
ADB 0.00 26 Dec 2008 0.00 0.92 92%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Dec 2008 0.00 0.92 92%

Loan

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 46.03 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 46.03 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

Loan 2463-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Oct 2008 13 Feb 2009 04 May 2009 31 Dec 2013 - 02 Apr 2014
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 96.00 Cumulative Contract Awards
ADB 51.00 29 Oct 2008 51.00 0.00 100%
Counterpart 45.00 Cumulative Disbursements
Cofinancing 0.00 29 Oct 2008 51.00 0.00 100%

Loan 2464-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Oct 2008 13 Feb 2009 04 May 2009 31 Dec 2013 - 02 Apr 2014
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 29.00 Cumulative Contract Awards
ADB 29.00 29 Oct 2008 29.41 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 29 Oct 2008 29.41 0.00 100%

Loan 3034-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Sep 2013 02 Oct 2013 09 Oct 2013 31 Dec 2014 30 Jun 2015 28 Jul 2015
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 40.00 Cumulative Contract Awards
ADB 39.00 30 Sep 2013 35.11 0.00 100%
Counterpart 1.00 Cumulative Disbursements
Cofinancing 0.00 30 Sep 2013 35.11 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - - - Satisfactory

TA 7157-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Oct 2008 20 Nov 2008 20 Nov 2008 31 Dec 2010 30 Dec 2011 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,488,000.00 0.00 24,000.00 0.00 0.00 0.00 1,512,000.00 29 Oct 2008 1,463,516.87
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - - - Satisfactory

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Green Power Development Project: Social and Environmental Monitoring Report (June 2013) Environmental and Social Monitoring Reports Jun 2013
Green Power Development Project: Social and Environmental Monitoring Report (March 2013) Environmental and Social Monitoring Reports Mar 2013
Green Power Development Project: Social and Environmental Monitoring Report (December 2012) Environmental and Social Monitoring Reports Dec 2012
Green Power Development Project: Social and Environmental Monitoring Report (June 2012) Environmental and Social Monitoring Reports Jun 2012
Green Power Development Project Summary Initial Environmental Examination Jul 2008
Green Power Development Project Resettlement Planning Documents Jun 2008

Evaluation Documents

See also: Independent Evaluation

No documents found.


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