With 97 percent of the 1,020MW Punatsangchhu-II Hydroelectric Project Authority (PHPA-II) completed, the plant is likely to begin operations by August 15 this year.
“If everything goes according to plan, we aim to commission two units within August and the remaining four units by the end of this year,” according to officials from the Ministry of Energy and Natural Resources.
There are six units, each with a capacity of 170 MW. Commissioning two units by August would have the capacity of 340 MW.
Once commissioned (six units), PHPA-II will generate 4,357 million units of electricity annually.
A ministry official said that the project faced many challenges related to construction, leading to significant delays. The delay, he said, was compounded by the outbreak of Covid-19 which hampered the progress by almost two years.
“After easing of lockdown measures in the country, the pace of construction has increased significantly. The physical progress of the project has reached 97 percent,” he said.
The construction of PHPA-II began in 2010 and was supposed to be completed in 2017. However, a massive landslide struck the powerhouse in 2016.
As for revenue generation, a ministry official said that the tariff discussion with the government of India was underway.
The cost of completion is expected to be Nu 94.46 billion. The official said that the financial progress of the project as of now was around 90 percentPHPA-II was constructed with the financial modality of 30 percent grant and 70 percent loan from the Government of India.
As of March this year, hydro-debt stood at Nu 167.5 billion, 64.1 percent of the total external debt (Nu 261.12 billion).
According to the finance ministry, the hydropower debt is considered low risk as debt servicing for hydropower loans from India starts only a year after the commissioning of the projects, which ensures revenue inflow before debt servicing starts.
Electricity export tariff is calculated based on the projects’ overall cost, including the projected debt servicing cost, which ensures that the revenue from the sale of electricity provides adequate cushion for debt servicing.
All hydropower projects are insured and reinsured against natural risks. The uninsured debt pertains to hydrological risks.
According to the finance ministry, hydropower projects are deemed commercially viable, with a secured export market in India. Moreover, 91.1 percent of the hydro debt is denominated in INR, which does not pose any exchange rate risks due to the currency peg.
