Bhutan: Green Power Development Project II

Sovereign Project | 44444-012

Summary

The project outputs include (i) operation of a 118 MW run-of-the-river Nikachhu hydropower plant and its associated transmission lines, and (ii) enhanced institutional capacity of DGPC in financial, social, and environmental terms. The project will generate power of 903,490 MWh on the average annually. Power generated is expected to be exported outside Bhutan. Given that clean and renewable power export will be counted as carbon saving, the resulting reduction of greenhouse gases equivalent to CO2 emissions is estimated as around 1,000,000 tons every year assuming on the Indian grid system benchmark.

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Project Name Green Power Development Project II
Project Number 44444-012
Country Bhutan
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7887-BHU: Green Power Development Project II
Japan Fund for Poverty Reduction US$ 1.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector Energy - Large hydropower generation
Industry and trade - Trade and services
Gender Equity and Mainstreaming Some gender elements
Description The project outputs include (i) operation of a 118 MW run-of-the-river Nikachhu hydropower plant and its associated transmission lines, and (ii) enhanced institutional capacity of DGPC in financial, social, and environmental terms. The project will generate power of 903,490 MWh on the average annually. Power generated is expected to be exported outside Bhutan. Given that clean and renewable power export will be counted as carbon saving, the resulting reduction of greenhouse gases equivalent to CO2 emissions is estimated as around 1,000,000 tons every year assuming on the Indian grid system benchmark.
Project Rationale and Linkage to Country/Regional Strategy

In 2008, ADB approved financing the Green Power Development Project for Bhutan to mainly promote the Dagachhu hydropower development (114 MW) for power export to India, through a public private partnership (PPP). As a post Dagachhu, the Government of Bhutan officially requested ADB to prepare the Nikachhu hydropower development on 6 September 2010. The Project is a medium size run-of-the-river type which will have smaller environmental and social impacts than reservoir types. It is located on the Nikachhu River in Trongsa of the central Bhutan.

Bhutan is the only South Asian country with a surplus of power for export. While there is seasonal demand and supply gaps particularly in dry winters, the country's annual generation capacity (around 1,500 MW) is significantly greater than its domestic demand; Bhutan is a net power exporter. Of total power generated, around 80% is exported to India as of 2010. Power exports account for more than 40% of national revenue and 25% of gross domestic product (GDP) in Bhutan. Hydropower infrastructure development also contributes another 25% of GDP through the construction sector. The revenue from power exports are the primary source for the government's socioeconomic development for health, education, agriculture and rural development. The hydropower development thus forms the backbone of Bhutan's economy and social lives.

Bhutan's potential hydropower is 23,760 MW, 6% of which has been exploited to meet domestic consumption and the reminder is for export. On the other hand, neighboring countries including India and Bangladesh are experiencing a large power supply deficit and their power sources are dominated by fossil fuel-based thermal generation plants with greenhouse gas emission. Clean energy development for power export from Bhutan will increase energy supply stability, improve energy efficiency, and foster climate change mitigation on the sub-regional level. The development of a transmission interconnection between Bangladesh and India is expected to expand the subregional network potential. Given the fact that Bhutan has recently faced with shortage of power during the winter periods due to fast growing domestic demand and reduction of river water flows in the dry seasons, Bhutan also has economic incentives to import power from the neighboring countries during the lean seasons through the cross-border network. To establish the complementary relationship of power supply among the three countries and to diversify potential buyers and sellers are expected to step forward to a regional power trading market in a competitive environment and strengthen energy security with each other. Trilateral energy trade in the sub-region will eventually contribute to economic growth through deeper regional integration.

Impact tbd
Project Outcome
Description of Outcome tbd
Progress Toward Outcome
Implementation Progress
Description of Project Outputs tbd
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design A series of consultations with affected persons and communities have been conducted by the project implementing agency for project preparation, and they will be continued.
During Project Implementation A series of consultations with affected persons and communities will be continued throughout project implementation.
Business Opportunities
Consulting Services The TA will require 40 person-months of consulting services (28 international and 12 national) for 16 positions (Table A5.3). The TA will be implemented over 15 months. ADB will engage a consulting firm or consortium of firms using quality- and cost-based selection (QCBS) procedures in accordance with ADB's Guidelines on the Use of Consultants (2010, amended from time to time). The TA-financed equipment will be procured under ADB's Procurement Guidelines (2010). The disbursements will be made under ADB's Technical Assistance Disbursement Handbook (2010, amended from time to time). The TA, among other tasks, needs to adequately address the following aspects relating to the ensuing loan project: (i) detailed capacity assessment for executing and implementing agencies, and their remedial action plans to minimize procurement and financial management risks if any; (ii) loan related procurement plan; and (iii) implementation schedule with sequencing of any consultant recruitment and procurement bidding and awarding.
Responsible ADB Officer Kaoru Ogino
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Department of EnergyThimphu
Bhutan
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 10 Oct 2011
Last Review Mission -
Last PDS Update 30 Sep 2014

TA 7887-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
10 Oct 2011 08 Nov 2011 08 Nov 2011 28 Feb 2013 12 Dec 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,000,000.00 250,000.00 0.00 0.00 0.00 1,250,000.00 10 Oct 2011 973,116.68

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