Strategy for gross national happiness (sgnh) Annexures to the Main Document

2. 
   While we need to provide competitive enabling environment to attract IPPs, the interest of the state has to be also protected. To ensure that the committed investment is made, performance bond of 5% of project cost till 20% of the financial progress is achieved will be required to be provided by the investors. In case the project is abandoned, all assets at site and the performance bond will be forfeited to the government.
   

11. 
    Employment and Immigration Issues
    
    1. 
       The execution of 12 projects over the next twenty years indicates deployment of 100,000 employees during the peak construction period of 2013-16. The operation and maintenance of these stations will provide permanent employment to 7,400 (6,000 skilled and 1,400 security personnel). It would not be possible to provide all the required manpower for construction and operation of the projects from within the country. This requires import of thousands of manpower, especially during the construction period. With the primary aim of accelerating hydropower development, import of manpower required for both construction and operation of hydropower stations need to be freely allowed. However, the opportunity for providing substantial numbers of good paying jobs cannot be wasted and implementation of SKILLS-2008 as an integral component of SGNH should provide the desired critical mass of skilled manpower to be employed by these projects. Without hampering the progress of the project implementation, to the extent that local skills are available, a minimum threshold of employment of Bhutanese by the IPPs should be defined in the IPP policy.
       

12. 
    Security Issues
    
    1. 
       All activities in the nation will be secondary to its security and sovereignty, and therefore all IPPs shall strictly abide by the prevailing law and order requirements of the nation. During the construction period, when thousands of employees would be concentrated in project sites, special security arrangement would need to be provided by the state to ensure law and order in the particular region. The state shall accord equal protection to the IPP and their employees as to its citizens. IPPs will be responsible for the security of their plant and personnel.
       

13. 
    Enabling Environment
    
    1. 
       The key to successful involvement of private developers in hydropower sector will hinge on the enabling factors to be provided by the government. To achieve the desired level of investment, certain shifts in policies and systems will be essential.
       
    2. 
       IPPs will be subject to all the laws of the nation. However, if required to encourage adequate and timely investment in the sector, special dispensation from certain Acts and their regulations need to be provided. Additional Acts to facilitate investment, such as Contract Law, Arbitration Act, IPP Act, etc. may need to be enacted. The full extent of the specific project dispensations to be provided would become clearer once the process for soliciting offers for private investment has been initiated, even before the finalization of the IPP policy and associated institutional strengthening has been implemented. All stakeholders should be involved during preparation of the project DPR so that all clearances are obtained on finalization of the DPR.
       
    3. 
       Institutional capacity building and restructuring is required to respond to these requirement. In the near term, in view of the capacity constraints within the nation, consulting firms for enabling developing of hydropower projects need to be immediately engaged. Single window for expediting project clearances shall be provided along with clear procedures for provision of permits during the execution stage.
       

3. 
   Implementation Procedure and Program
   
   1. 
      To achieve the development of more than 3,000 MW of installed capacity by the year 2028 through private investment, an aggressive program for implementation has to be pursued. Because of what is occurring in our energy market – India, time is the essence if we are to succeed in our ambitious goals.
      
   2. 
      To serve as a learning experience, a pilot IPP project was contemplated to be initiated even ahead of finalization of related policies and institutional strengthening. However, a comparative study of the projects identified to be developed through IPPs does not provide a clear picture for selection of a pilot IPP project. Instead, it has been deemed better to initiate invitation of offers for implementing projects by IPPs even while related policies are being framed.
      
   3. 
      While the Hydropower Policy, including IPP participation, is being developed under the ADB TA, the offer of hydropower projects to private investment needs to be initiated concurrently while the policies are being developed. To enable this, consultants may be recruited to tender out some projects. A program for introduction of IPP is proposed below.
      

Table 8.4: Program for Introduction of IPP

4. 
   The implementation schedule of the 12 projects, including the 7 to be developed through private capital is as per Table 6.1. The schedule for these 7 projects of 3,160 MW extends from 2008 till 2028. However, if private investors can be attracted to invest in these projects, these projects could be implemented well before 2028. Based on the response of investors at the road show and their visits to Bhutan, the required institutional strengthening would then have to be adequately and timely addressed. The potential IPP participants are identified in the next section.
   

1. 
   The existing domestic demand as of December 2006 is 157 MW (67 MW for household consumers and 90 MW for the industries). In addition, about 140 MW of load demand has already been approved as of December, 2006. This will require that a total of 300 MW capacity is available for domestic consumption against the firm power availability of 283 MW even with the commissioning of Tala.
   
2. 
   The demand shortage is mainly on account of the recent mushrooming of power intensive industries due to the subsidized power tariff in Bhutan. The current annual subsidy to the domestic energy demand is over Nu. 1.00 billion with the heaviest subsidy to the household customers followed by industries.
   

Table 9.1: Power subsidy for 2008 (BEA)

3. 
   Power Allocation and Industrial Subsidy Phase Out
   
   1. 
      Considering that rural electrification will add another 50,000 households and the industrial demand is increasing at a rapid rate (mainly on account of subsidized tariff), a power allocation notification (No. 9/DOE/HQ/2005-06/16 dated 20.6.06) has been issued limiting the sanctioning of new demand within the firm power availability. As per the tariff determination regulation of the BEA, the subsidy to the industrial consumers shall also be phased out by 2010 (with tariff increment of 10% per annum).
      
   2. 
      On the other hand, it would be in the long term interest of the nation to encourage power intensive industries so long as they are not subsidized and the seasonal variation of energy is acceptable to their production schedule. This will not only add to the GDP but also ensure a diversified demand to complement the export market. After the improvement of the regional infrastructure (through road and railway linkages) and establishment of the economic hubs, the production costs in Bhutan might still be competitive. Therefore, appropriate power pricing policy guidelines need to be adopted to encourage investments in the industrial sector.
      

1. 
   Policy Guidelines for future power pricing in the Industrial Sector
   
   1. 
      The ideal situation is to capitalize on the export market and grow the domestic demand after removing the subsidy. Norway, another hydropower dominated country, in the early sixties found its export market limited due to lack of transmission infrastructure across the sea to mainland Europe. The country was also limited with internal resources to promote any domestic industries. However, they came up with the innovative idea of capitalizing on their competitive shipping industry; barges and ships were used not only for bringing in raw materials from overseas but also as marine industrial bases where factories where erected and connected with power supplies. After manufacturing, the finished goods were then exported in the same barges to overseas market. A similar strategy could be used to promote domestic industrial base.
      
   2. 
      Given that the industrial tariff is very high in most regions of India (Nu. 4-5/unit), Bhutanese industries might still be competitive since tariff in Bhutan will still be lower than that of India even after removing subsidy. In addition, CIT contribution and employment generated might be additional benefits from these industries. Some of the policy guidelines to be adopted in industrial power pricing could be as follows:
      

• 
  Power industries are encouraged provided there is no subsidy in tariff
  
• 
  Send a predictable signal for industrial power tariff to guide long term industrial planning
  
• 
  Tariff should be either equal to export tariff (at least meet the opportunity cost) or based on actual cost of delivery (remove subsidy).
  

• 
  Notify firm power availability and load scheduling (industries might have to shut down during the lean season).
  
• 
  Utilize re-import arrangement with GoI at export tariff during lean season as per the Article-7 of the Umbrella Agreement between the Royal Government of Bhutan and the GoI concerning cooperation in the field of Hydroelectric Power.
  
• 
  Encourage the Bhutanese hydropower plants with diurnal pondage to peak during lean season to further facilitate re-import during off-peak hours and export during peaking hours.
  
• 
  Discontinue re-import if re-import tariff is more than export tariff unless otherwise cost can be passed onto industrial customers.
  
• 
  Allocation of firm power should be in the order of priority; households & public institutions, small and medium industries and & heavy industries.
  
• 
  The remaining firm power allocation if available shall be done on antecedent rights (vested rights of first come first serve).
  
• 
  Allow captive power plants for domestic industries.
  

3. 
   Domestic Load and Demand Forecast:
   
   1. 
      The PSMP (2004) had estimated that the domestic demand would reach 352 MW and 1,793 GWh of energy by 2022.
      

Table 9.2: Load Forecast as per the PSMP (2004)

4. 
   Revised Load and Demand Forecast
   
   1. 
      The revised forecast with the latest data from the BPC indicates that the PSMP forecast has been exceeded by three fold (757 MW of demand by 2022 as against the projection of 352 MW in the PSMP). This is primarily due to the increased industrial demand and the increased rate of the rural electrification. This revised demand seems to be more realistic especially after considering that industrial estates are planned at Samtse & Jigmeling each with preliminary requirement of 100 MVA and with the growth centres and economic hubs planned along the southern and central belt.
      

Table 9.3: Supply & Demand forecast based on planned generation and prevailing trend of internal demand

• 
  The diversity load factors used are 0.6 for domestic, 0.7 for MV and 0.8 for HV customers.
  
• 
  Transmission and distribution losses are taken in account based on the actual field records.
  
• 
  Due to constraint in availability of firm power during the lean season, the power sanction for new industries has been capped at 400 MW. This will be the scenario till the commissioning of the next project in 2011 unless we can arrange optimal exchange for export and re-import during peak and non-peak hours during lean season.
  
• 
  The number of prospective industries is not known and this will be driven by the availability of firm power. For the load forecasting purpose, 8% annual growth rate has been used.
  

5. 
   Domestic Energy Security: The above demand forecast indicates that the domestic energy security will not be achieved unless the target of accelerated hydropower development is met.
   

5. 
   Rural Electrification (RE)
   
   1. 
      Rural Electrification is another challenge for the electricity sector. Given the difficult terrain of the remote villages, the cost of bringing electricity to the rural households is extremely high. The capital cost is over Nu. 100,000 per household and then the energy subsidy is almost Nu.3 per unit⁶⁴. This translates into a fund requirement of Nu. 5.00 billion as capital investment and Nu. 1.00 billion per annum as energy subsidy thereafter for providing the services. While all rural electrification is based on an economic internal rate of return (EIRR) of 12%, the real impact, both economic and social has not been assessed as yet. Therefore, it is necessary to realign the targets of RE along with the SGNH.
      
   2. 
      Meanwhile, the target of Electricity for All by 2020 is being implemented rigorously for poverty alleviation and to provide access to clean energy for livelihood, environment conservation and creating opportunities to mitigate rural-urban migration. RE programs under the 10^th & 11^th FYPs are synchronised with the construction of feeder roads to optimise costs. While target number of households will remain the same, the actual list of villages shall now be changed depending on the strategy of cluster development which will require that first the other infrastructure like roads and urban centres be established before grid electricity is taken to those certain areas.
      
   3. 
      RE proposals for the villages covered in the Sunkosh & Amochhu basins need to be re-looked considering the submergence. The affected villages have to be relocated and provided electricity as per the RE Master Plan. The RE plan to electrify Merak & Sakten on grid also needs to be re-looked in view of the NSP 2008.
      
   4. 
      Alternative Planning Framework for RE Project: Going by the 10 FYP RE Plan through JBIC financing, it is apparent that contribution from Central and Local Governments are working out to 70:30 ratio. The idea of constructing high tension line (11 kV or 33 kV) upto the village load center including distribution substations by the Central Government and allowing the Local Government to develop the LT network at its cost is already in practice as per the following cost allocation for the RE projects.
      

Table 9.4: 10 FYP RE Plan included in JBIC financing

Dzongkhag	Central Govt.	Local Govt.	House Hold
Bumthang	77%	23%	701
Chhukha	60%	40%	2,506
Dagana	72%	28%	2,096
Mongar	70%	30%	874
Paro	88%	12%	21
Samtse	58%	42%	2,456
Yangtse	69%	31%	819
Trongsa	76%	24%	1,146
Tsirang	69%	31%	4,832
Average/Total	71 %	29%	15,451
Cost	581.31 million	237.44 million

Table 9.5: RE Master Plan

	Till 9 FYP (Km)	10 & 11 FYP (Km)	Remarks
No. of HH	64,500	29,338	21,519 in 10 FYP & 7,819 in 11 FYP
Infrastructure:
33 kV lines	886	1,585	Booked to Central Budget
11 kV lines	1,468	725	Booked to Central Budget
LT lines	3,027		Booked to Local Budget

10. 
    Enabling Environment for Accelerated Hydropower Development
    

1. 
   Introduction
   
   1. 
      The hydropower sector should capitalize on certain inherent and favorable conditions that exist in our country, e.g. safe and secure working environment, small and relatively more efficient bureaucracy, etc. Hydropower development should be accelerated while we still have this advantage.
      
   2. 
      A firm and quick decisions and approval from the government on accelerated projects (including IPP projects) with Sunkosh as one of the priority projects shall enable the sector to achieve the target faster.
      
   3. 
      The GoI is already committed to implement 1,095 MW Punatsangchu-I on a model similar to Tala Project. The realistic modality for execution of Sunkosh Project would be total financing from GoI preferably with 80% grant and 20% loan because of its magnitude and multiple benefits. In the event that the irrigation components of the project are not constructed, the project could be implemented as a peaking hydropower station without the 60 MW lift concrete dam and 13 km irrigation canal downstream of the main rock-fill dam. This mega (4,060 MW) project could be yet another major friendship project between India and Bhutan and therefore is recommended to be implemented.
      

1. 
   Formulation of Policies and Guidelines for Foreign Investment
   
   1. 
      In addition to the current policies and plans, the following policies and guidelines which are crucial for acceleration of hydropower development should be formulated by the DoE on priority basis and adopted by the government by June 2007:
      

• 
  Energy Policy
  
• 
  Hydropower Policy
  
• 
  IPP Guidelines
  

2. 
   Bidding documents should be also prepared for prospective IPP projects by the Department of Energy.
   

3. 
   Fund for DPRs and Hydropower Development Activities
   
   1. 
      For accelerated hydropower development, DPRs and availability of fund for equity investment would be very crucial. For this, 20% of the profit after tax from fully government owned generating companies should be retained with DGPC/DHI for re-investment in hydropower development activities. This needs to be implemented starting from 2007 calendar year.
      

4. 
   Permits and Clearances
   
   1. 
      For expeditious development of hydropower projects under SGNH, it is desired that the status of Special Economic Zones (SEZs) be given to the hydropower project sites to attract investments and expedite necessary clearances for implementation of projects. Past experience indicate that valuable time is lost on obtaining permits from the agencies. If this process is not improved, it will make our projects less attractive to the private investors. The following agencies involved in the issuance clearances for the projects should make every effort to improve their service delivery mechanisms to expedite the project implementation:
      

1. 
   National Environment Commission
   
2. 
   Department of Survey, Ministry of Agriculture
   
3. 
   Department of Agriculture, Ministry of Agriculture
   
4. 
   Department of Forest, Ministry of Agriculture
   
5. 
   Department of Immigration, Ministry of Home & Cultural Affairs
   
6. 
   Department of Revenue & Customs, Ministry of Finance
   
7. 
   Department of Labor, Ministry of Labor & Human Resources
   
8. 
   Department of Energy, Ministry of Economic Affairs
   
9. 
   Bhutan Electricity Authority
   
10. 
    Dzongkhag Administration, Ministry of Home & Cultural Affairs
    
11. 
    Royal Bhutan Police
    
12. 
    Department of Medical Services and Department of Public Health, Ministry of Health Services
    
13. 
    Department of Roads, Ministry of Works & Human Settlement
    

1. 
   The DoE should provide the schedule of project activities to be implemented well in advance to concerned organizations for the purpose of obtaining clearances.
   
2. 
   The NEC should process and issue Environment Clearance on time. It is necessary also to involve stakeholder agencies like NEC right from the pre-feasibility to DPR stage so that the EIAs are carried out and incorporated in the DPR to the satisfaction of NEC. This will enable fast environmental clearance for projects.
   
3. 
   For continuous movement of people and transportation of machinery and materials, check posts on access roads will have to be kept open till late hours and also open at early hours. It is estimated that, just for Punatsangchhu alone, it would require 0.60 millions MT of steel, and 1.25 million MT of sands and in aggregate these translates into 2 million truckloads over 3 years of the project lifetime. In aggregate, this will require 87 days just to clear steel and sand even if the check posts operate 24 hours a day. Therefore, it is very essential that the agencies that are putting up check points facilitate movement of such goods without delay. Furthermore, a large number of heavy machinery & equipment, trailers, trippers and trucks would have to be mobilized for project construction and demobilized after completion of projects. Therefore, the following government agencies which have their respective regional offices/units in border town(s) will have to establish devoted counters for delivery of quick and efficient services to hydropower projects:
   

1. 
   Department of Revenue and Customs (MoF)
   
2. 
   Department of Immigration (MoHCA)
   
3. 
   Department of Labor (MoLHR)
   
4. 
   Road Safety & Transport Authority (MoIC).
   

5. 
   Devoted clearance arrangement by the above agencies is necessary for fast and smooth a) mobilization of large foreign workforce, b) induction of machinery/equipment/vehicles c) import of construction materials during construction period and d) demobilization of such resources after completion of hydropower project works. The Immigration and Labor departments will need to grant blanket annual sanction to the project authorities for en masse induction of foreign workers (skilled & semiskilled) and facilitate expeditious renewal of identity cards of project workers.
   
6. 
   The DoF will need to issue forestry clearance for survey and erection of transmission lines. It is recommended that this clearance be issued by the concerned Divisional Forest Officers and Park Managers during the preparation of DPR. It is also recommended that the allotment of government land required for constructing HE Projects and construction of residential colonies for the project staff be processed or facilitated within the DPR preparation period by the DFO.
   
7. 
   It is learnt from the experience of Tala Project that rocks suitable for construction of dam, tunnel lining, etc. is indeed scarce as most of the hard rocks in Bhutan Himalayas not only contain a lot of mica but also contain silica which reacts with alkali in cement (OPC). This alkali-silica-reactivity (ASR) is known to cause gradual deterioration of concrete structures. For this reason, it is very important that the quarries are adequately tested for their quality and suitability for production of aggregates and mass concrete for construction of dam, tunnels and other major civil structures. Large quantities of building materials like stones and boulders would be required by the projects. The DGM in co-ordination with DoF will have to be actively involved in identification of suitable quarries for sand & aggregate deposits and along with the NEC and grant permits expeditiously for extraction of such materials by major contractors or private parties.
   

1. 
   Land Acquisition, Right of Ways & Compensation
   
   1. 
      The current land acquisition and allotment procedures are a major hurdle in the timely implementation of projects. Prospective developers have indicated this as their biggest concern. To expedite this, the following measures are recommended:
      

• 
  Have a clear policy on buy versus rent on development of housing colonies and it is suggested that private housing be encouraged to supplement the requirement of projects during O&M stage.
  
• 
  Share the information on project sites, transmission corridors layout and acquisition areas with Dzongkhag administrations and land owners.
  
• 
  Familiarize stakeholders on revised Land Act procedures and assessment of fair market value.
  
• 
  Constitute a strong national committee to plan, implement and supervise land acquisition and compensation process for projects.
  
• 
  Adopt the draft ROW regulations from the energy sector (BEA).
  

2. 
   The existing procedures have become lengthy due to limited coordination among the agencies concerned. In the case of hydropower projects, land has to be acquired for construction of permanent structures like dam, power house (if surface), substations, transmission towers, office & residential complexes and establishment of temporary sites such as labour camps, etc. Concerned Dzongkhag Administration should be involved in the allotment of government land and acquisition of private land for project construction right from the beginning.
   
3. 
   Further, as land compensation rates are not attractive, private landowners are reluctant to give up their land for project purposes. To avoid complications which may arise from such situations, the procedures for land acquisition and land allotment need to be established as per the provisions of the latest Land Act. The Act specifies that compensation for land acquisition should be based on fair market value. If this procedure is implemented it will create an enabling environment not only for hydropower development but also for other development activities.
   
4. 
   In the case of transmission lines passing through private or government land, easement right⁶⁵ has to be provided for un-interrupted distribution and supply of power to consumers and for export purposes. A land or portion thereof required for the purpose of constructing transmission lines and underground cables shall be carried out with the RoW where it does not constitute a full acquisition and transfer of the ownership to the utility agency. Such right constitutes an easement by the utility agency both to the public and private property.
   

6. 
   Safe Transport & Custody of Explosives
   
   1. 
      Safe transport and custody of explosives is of utmost national security concern as huge quantities of explosives & accessories would be stored at various locations within each project area. For example, Tala Project had built five magazines at various construction sites with a total capacity of 50 metric tones. The project works had consumed about 4,546 metric tones of explosives by end of January 2002. The prime responsibility for storage and safe custody of such large volumes of explosives should not lie with the project authorities, managements and their contractors. The explosives magazines could be built at required locations in the project area by the project authority as per the specifications approved by the MoHCA to be operated by State Trading Corporation of Bhutan (government authorized dealer) and guarded by RBP or NISF personnel. Armed escorts will have to be provided by RBP whenever explosives are transported from STCB’s mother magazine(s) to site magazines and within the project area. Regular inspections of site magazines and checking of monthly consumption of explosives should be carried out jointly by the Division of Law & Order (MoHCA), concerned Dzongkhag administration, RBP and project’s chief security officer (deputed by ISF) and destruction of damaged or expired explosives, detonators and accessories to be carried out as per prevailing Explosives Rules & Regulations. All these measures will enable proper storage, custody and handling of explosives and prevention of untoward incidences involving such restricted and dangerous items.
      

7. 
   Infrastructure Facilities
   
   1. 
      Unhindered road access to the hydropower project sites is the most crucial enabling condition for timely and successful implementation. Delays in transportation of goods, machinery and services to project sites due to road blocks or traffic jams will lead to slow progress of works, substantial increase in project cost and contractors’ claims.
      
   2. 
      Since most project sites to be implemented are in central and western Bhutan, the immediate tendency of the contractors would be to use the Phuentsholing-Thimphu highway for transportation of construction materials and movement of heavy machinery. When this happens, the traffic density on this vital national highway would suddenly increase and would hinder the implementation of Punatsangchhu-I (1,095 MW) and Punatsangchhu-II (990 MW) mega projects. Further, the Phase-III road widening activity of DANTAK will further compound this problem. And conversely, such a situation may also drastically slow down the progress of DANTAK’s works on the highway.
      
   3. 
      During the peak construction stage of Tala Project, the traffic density had increased very significantly on the national highway between Phuentsholing and Wangkha with the addition of more than 150 to 200 trucks daily carrying construction materials and supplies to the project sites. This led to the rapid deterioration of the highway (as it was not built for such higher loads), occasional vehicle accidents and traffic jams which caused delays in transport of men & machinery and inconvenience to travelers.
      
   4. 
      Long and frequent traffic jams or road blocks on the Thimphu-Phuentsholing highway will not only lead to costly delays during the construction period but also adversely affect the daily lives of many living in the capital, western and part of central Bhutan. The Jhumja landslides during rainy season will add yet another dimension to this problem.
      
   5. 
      Therefore, to avoid such an undesirable and costly situation in the near future, widening of Gelephu-Sarpang-Tsirang-Wangdi and Gelephu-Trongsa roads and construction/reinforcement of bridges need to be accorded top priority as the basic enabling condition for Punatsangchhu-I & II, Dagachhu (CDM), Nikachhu and Mangdechhu projects. It is recommended that the above mentioned works be taken up by the Ministry of Works & Human Settlement using our internal resources.
      
   6. 
      However, while widening and up-gradation of Gelephu/Sarpang-Tsirang-Wangdi road is undertaken, due consideration needs to be given to the level and extent of submergence which would result when Sunkosh Project is implemented (up to 391.2 masl as per DPR, 1995, CWC, GoI). The highways/roads and bridges which need to be upgraded in the immediate and near future are given in Table 10.1. The Table also includes new roads which needs to be built on priority basis to meet the given implementation schedule (2008-2028).
      

Table 10.1: Access Roads to Facilitate Implementation of Hydro Projects (2008-28)

Highway/Road/Bridge	Hydropower Projects	Constructed/upgraded by	Remarks
Gelephu-Sarpang-Tsirang–Wangdi	Punatsangchu I & II & Dagachhu (CDM)	2008	About 77 tons single load expected with 4.5x5.5x6 metres trailer weighing 30 tons additional.
Gelephu-Tingtibi-Trongsa	Mangdechhu & Nikachhu	2009	-do-
Tingtibi-Gongphu-Digala-Thidangbi (Mongar) link (Inter-Dzongkhag connectivity)	Chamkharchhu-I (Digala), Chamkharchhu-II (Kheng Shingkhar) + power transmission right of ways)	2010-2015	Prioritize construction of inter-district highway Gomphu-Shingkhar (Zhemgang) and extension to Thidangbi (Mongar)
Halhalay(Samtse)- Dorokha-Rangtse-Yaba (23+40+11.3 km)	Amochhu I	2009-2013	Prioritize the construction and upgrade to 2 double lane roads.
Mongar-Lhuentse-Khoma	Khomachhu	2013	Build this section of road and bridge over Kurichhu
Tashigang/Chazam-Doksum	Kholongchhu	2009
Mongar-Lhuentse	Rotpashong	2009
Phuntsholing-Raidak-Lhamoizingkha-Phibsoo-Sarpang-Gelephu	Sunkosh & East-West national highway	2009	Schedule construction of Sunkosh Project and SEWH so that Sunkosh lift dam would serve as the bridge across Sunkosh river in Lhamoizingkha

8. 
   Construction Power
   
   1. 
      Construction power would constitute yet another very important requirement for implementation of hydro power projects. Tala Project’s demand during its 5 years of peak construction stage was about 14 MW and was provided by CHPC located just 3 km upstream of Tala’s dam at Wangkha. Therefore, just as access roads have to be built or upgraded, the transmission lines and substations have to be constructed as per the schedule given below and this task is proposed to be given to BPC as soon as agreements are signed with the parties concerned for implementation.
      

Table 10.2: Arrangement for construction power

Construction Power & Telecom Facilities	Hydropower Projects	Proposed Action	Remarks
66/33 kV Transmission lines from Rurichhu/ Tsirang transmission substations	Puna I, Puna II & Dagachhu CDM	Construction power lines to be initiated from 2007	About 15 MW construction power required for Puna-I and Puna-II and about 10 MW for Dagachhu.
132/33 kV lines extension from Yurmochhu substation	Mangdechhu & Nikachhu	2009	15 MW for Mangdechhu and 10 MW for Nikachhu
132/33 kV lines extension from Tingtibi	Chamkharchhu	2010	15 MW each for each Project.
132/33 kV lines extension from Kanglung/Nangkor/ Gyelpoizhing/Tangmachhu	Kholongchhu, Rotpashong and Khoma	2010-2020	15 MW construction power is required and delivery to be scheduled as per Implementation Plan
66/33 kV lines extension from Samtse/P/ling	For Amochhu Power	2009-2013	-do-
220/400 kV lines extension from Malbase/Monitor or from Jigmeling/Tsirang	Sunkosh	2009	Choose higher voltage for inter-connection possibility in future.

10.10 Labor and Immigration

10.10.1A total of about 17,000 workers were engaged during the peak construction stage of 1,020 MW Tala Project. Punatsangchhu-I and II together would engage about 30,000 workers when their peak labour requirements overlap. About 90% of this work force would be foreigners who would become fairly mobile once they are inducted. Further another 30-40% of this number will constitute people who will be going out on leave, getting repatriated or getting listed as absconded. In this regard, the immigration offices at the border town(s), at check post(s) and at outpost(s) in the project area need to be strengthened with adequate staff and modern office equipment to keep up-to-date accurate records of entry and exit of foreign workers and fast verification of the identity of workers. The Labor Wing of the project would be their counterparts for ensuring peaceful working atmosphere in labor camps, general welfare of the laborers, their safety at work places and compensation in cases of accidents.
10.11 Health Services

10.11.1The Ministry of Health will have to provide the necessary health service support through establishment of hospitals and BHUs in project areas to cater to the project staff and workers. The hospitals and BHUs should be adequately equipped to deal with accident cases and carry out regular activities to prevent diseases in the project area or spread of disease from labor camps to local communities and vice-versa, and promote health and sanitation. In coordination with the Dzongkhag health officials, the project hospitals should initiate and carry out awareness campaigns on STD, HIV/AIDS, malaria, dengue and other life-threatening diseases.

10.12.1An effective monitoring and warning system will have to be established by the DGM in coordination with MoHCA for glacial lake outbursts (GLOFs) taking place at the sources of Phochhu and Chamkharchhu. This is of paramount importance to downstream projects like Punatsangchhu-I & II, Sunkosh, Chamkharchhu I & II projects where several hundreds of people would be working day and night at or near river bed level. This is a very serious concern as GLOFs are known to be very catastrophic. It is essential that the project authorities make emergency/contingency plans and standard operating procedures (SOPs) for safe evacuation of men and machinery in the event of such flash floods.

10.13.1Legal, regulatory and contractual issues will dominate the implementation of the mega hydropower projects with the involvement of the multinational stakeholders through IPP. Not only the policies have to be translated into Acts, rules and regulations and monitored thereafter, but also systems for proper contractual dispute resolution as per international norm should be established. In this regard, the BEA has to be strengthened to enable it to initiate the formulation of the regulatory frame work and create conducive investment environment.

10.13.2The following legislations may need to be adopted/observed to create proper environment for attracting IPPs:

• 
  IPP Act
  
• 
  Arbitration Act
  
• 
  Dispute Resolution System
  
• 
  National Spatial Act for governing zoning for hydropower
  
• 
  Amendment of the Electricity Act-2001 to empower the BEA instead of the Minister.
  
• 
  Labour Act
  
• 
  Immigration Act
  
• 
  Investment Act
  

10.14 Support Services by Private Sector

10.14.1The private sector participation in the construction of 1,020 MW Tala Project has been quiet substantial given the absorptive capacity of the local economy. The national contractors have taken up contracts and work orders for roads and buildings worth Nu. 4.52 billion during the period May 1997 – December 2006. For details refer table below.
Table 10.3: Payments made by THPA and its Executing Agencies to National Contractors

S#	Type of Payment	THPA (Nu. million)	THPA Contractors (Nu. million)	Total__2,444__2,076__4,520'>Total (Nu. million)
1	Payment on account of contracts awarded	2,120	975	3,095
2	Payment on account of work order awarded	324	1,101	1,425
	Total	2,444	2,076	4,520

10.14.2Considering the huge quantities of construction materials (steel, cement, sand, boulders, etc.) which would have to be transported to the project sites almost daily from the border town, the private sector would have to gear up to meet this enormous and critical requirement. The owners of local trucks and trailers should take all necessary prior actions to avail this opportunity and ensure that the bulk transportation needs of the project are fulfilled by them. The Bhutan Chamber of Commerce and Industry (BCCI) should find out the details of such requirement when projects are about to be started and quickly disseminate the information to the local transport agencies well before tendering of project works start.

10.15.1 Besides cement, steel and explosives, the projects would also require huge quantities of sand and aggregates of appropriate quality and strength for the construction of dam structures, tunnel lining, etc. Private business houses which have already been given licenses for operation of quarries, for example, in Wangdi-Punakha area should get their materials tested in advance for their physical properties and alkali-silica reactivity. If the quality and specification of the materials are found suitable they could supply the material as boulders to the major contractors to supplement their bulk requirement at rates negotiated between the parties. Such boulders could be extracted from quarries or from river beds. The DGM should initiate geological studies to locate suitable quarries and river borne material (RBM) in project areas for allotment to the lowest bidder through public auction. Competing demand from the housing industry might not leave much for the project requirement. Therefore, as far as possible, specific quarries need to be identified and reserved for projects. The DGM in coordination with the DoE and the DoF should carefully look into this future need and plan accordingly for making the materials available. In the event the sand quarries are not feasible or suitable, the possibility of setting up crushing plants should be explored.

Works/Contracts	Cement	Steel	Explosives	Aggregate
C1 Package (Dam complex)	235,236.55	32,857.88	1,356.35	1,058,269.23
C2 Package (HRT)	70,198.58	4,304.48	523.05	351,533.32
C3 Package (HRT)	63,722.30	4,561.04	480.01	200,391.65
C4 Package (HRT)	95,021.80	10,645.14	593.36	476,295.94
C5 Package (Power complex)	191,396.00	27,515.00	1,043.65	473,228.00
Infrastructure (Civil)	47,170.59	3,994.21	529.85	70,269.00
Transmission Works	17,960.55	11,961.05	20.11	94,126.00
Hydro-Mech Works	2,983.75	2,362.72	-------	-----
Total	723,690.12	98,201.52	4,546.38	2,724,113.14

10.16 Supplies of POL and LPG

10.16.1 The local distributors of POL and LPG should set up their outlets in or near the project area(s) for supply to project establishments, major contractors and the townships which are expected to spring up in the vicinity of project locations. Their storage capacities would have to be large enough so that they would be able to cater to the requirement of all relevant agencies. If this does not happen then there is likelihood that contractors will keep their own stock of POL to meet emergency requirements arising mainly from road blocks due to landslides during the rainy season. The concerned Dzongkhag Administration and Government Agencies will have to allot land on lease at suitable locations to the local POL distributors to set up their depots.

10. 
    Environmental and Social Impacts
    

11.1.1. The accelerated development of hydropower projects and subsequent development of other important sectors in the country will inevitably result in impacts on our environment. This chapter highlights some of the major environmental concerns due to accelerated hydropower development in the country.

11.2.1. Bhutan has a statutory requirement of maintaining 60% of the land under forest cover for all times to come. While most of the hydropower projects are environmentally friendly, the concern of deforestation and resulting environmental impacts are nevertheless apparent. As of today, Bhutan has a forest area of 72.5% of the total land area. The total area of forest with crown cover over 10% is 64.4% and the area under scrub forest is 8.1% of the total land area. The details are provided in the table below.

Land Use Types	Area (Km2)	As % of Land Area
Forest (with >10 % crown cover)
Fir	3,453	8.6
Mixed conifer	4,868	12.2
Blue pine	1,286	3.2
Chir pine	1,009	2.5
Conifer + broadleaf	1,358	3.4
Broadleaf	13,749	34.3
Plantation	64	0.2
Sub Total	25,787	64.4
Scrub forest (Forest with < 10 % crown cover)	3,258	8.1
Sub Total	3,258	8.1
Total Forest	29,045	72.5