Five joint venture projects of 2,690 MW under consideration

The Power Ministry has asked the Central Electricity Authority (CEA) to fast-track clearances for 2,690 MW of hydro projects to be set up in Bhutan in joint venture with Indian companies.

This followed the grid failure on July 30 and 31 that had resulted in the Government seeking power from the neighbour.

Detailed project report

“The detailed project report (DPR) for five projects with Bhutan are under advance stage of examination at CEA and the Central Water Commission (CWC).

“The projects would be finalised by December, after which it would go for Cabinet nod. All these five units must be finalised in 2012-13,” a Power Ministry official told Business Line.

The new projects would be set up as joint venture between Indian companies and Bhutan’s Druk Green Power Corporation (DGPC).

The Indian Government will not offer complete grants for the new units unlike the previous ones.

The projects would be funded in 30 per cent equity and the joint venture company will seek loans for remaining funds. At present, 1,416 MW capacities are operational and another 2,940 MW are under construction in Bhutan. These are expected to be commissioned by 2016-17.

Funding

“Of the 30 per cent equity, 15 per cent would be by the Indian players and remaining 15 would come from DGPC. However, DGPC would get grants from Indian Government to pay its share. The joint venture company will have to mop up remaining debt,” the official said.

In this pattern, the Indian Government will bring down its share of grants for setting up hydro projects in Bhutan. Also, public sector companies would get an opportunity to diversify into Bhutan, he added.

Imports during peak hours

Currently, India imports about 1,300 MW of electricity from Bhutan during peak hours. These were set up on grants from the Indian Government.

“The Government has provided Rs 3,400 crore of cash grant to Bhutan for setting up these projects. The remaining funds for the units are under loans with interest rate of around 10 per cent,” said the official.

Easy to operate

Hydro power proved to be the major rescue when half of India suffered a blackout last week.

Hydro power plants start generating electricity immediately after switching on, whereas coal-fired units take several hours.

siddhartha.s@thehindu.co.in

(This article was published on August 5, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.