Hydropower in Bhutan – Time for a rethink?

By Shripad Dharmadhikary
The first international visit undertaken by India’s Prime Minister Narendra Modi, who came to power in May 2014 with a landslide electoral victory and a personal mandate for development and governance, was to India’s tiny neighbour to the north east, the landlocked Himalayan state of Bhutan. This indicates the importance this kingdom holds for India. One reason is strategic – Bhutan forms a buffer between India and Tibet/China. The other reason is the large hydropower potential of Bhutan, which India views as a source of cheap electricity.

Win-Win Hydropower
Bhutan, with its many snow and glacial fed rivers with steep slopes and abundant flows has a large hydropower potential assessed at around 30,000 MW, with about 24,000 MW of this being technically feasible[1]. With 1480 MW capacity being created till date, just about 6% of this has been exploited. Bhutan has a ready market in India, its large, electricity hungry neighbour. On its part, India has been providing finance and know-how to build hydropower plants, and has been buying most of the power generated.

Close to 75% of all electricity generated in Bhutan is exported to India. This provides cheap power to India (the price of this electricity is governed by agreements with India) and valuable revenues and foreign currency to Bhutan. Hydropower exports provide more than 40% of Bhutan’s revenues, and constitute 25% of its GDP. Another 25% contribution to the GDP comes in form of hydropower infrastructure construction[2].

No wonder both the countries see this as a win-win situation. In 2006, India and Bhutan signed an agreement “concerning cooperation in the field of hydroelectric power”, whereby India agreed to import at least 5000 MW of power from Bhutan. In just three years after this, Bhutan pushed for acceleration, and a Protocol to the 2006 Agreement was signed between the two countries in 2009, wherein India agreed to support Bhutan to create an installed hydro capacity of 10,000 MW by 2020, and import all the surplus electricity. This is the basis for Bhutan’s ambitious 10/20 program, that is, to create 10,000 MW of capacity by the year 2020.

This capacity is expected to come from 10 mega projects. Out of these, three – 1200 MW Punatsangchu-I, 1020 MW Punatsangchu-II and 720 MW Mangdechhu – are under construction. The foundation stone for the 600 MW Kholongchhu was laid by India’s Prime Minister Narendra Modi during his visit to Bhutan in June 2014. The rest, which are at various stages of development are the 540 MW Amochhu Reservoir project, 570 MW Wangchu Run-of-the-River project[3], 180 MW Bunakha Reservoir project, the 2640 MW Kuri Gongri Reservoir project , the 770 MW Chamkharchhu-I HEP (Hydro-Electric Power) project and the 2560 MW Sankosh Reservoir project.

Increasing Concerns
In spite of the enthusiasm of the two governments, many concerns regarding hydropower projects are coming to fore. First of all are the social and environmental impacts of the projects. Bhutan is a global leader in conservation practices, and has an amazing 52% of its land under its protected areas network. While this may protect Bhutan’s terrestrial bio-diversity, it will not be sufficient to preserve its aquatic and riverine eco-systems. With large number of hydropower projects being planned in almost every river, and several projects in cascades in each basin, aquatic eco-systems will come under severe stress and threats.

Submergence due to pondage or reservoirs, flow alterations, blockage of fish migration paths due to dams, rivers drying up below dams as water is diverted into tunnels, impacts of tunnelling on natural springs, debris and muck disposal, impacts of operating turbines for generating peaking power which will lead to extreme flow and water level fluctuations, all these are likely to impact aquatic eco-systems badly.

For example, the Punatsangchhu project site was one of the habitats of the endangered White Bellied Heron. It is estimated that there are only 200 birds remaining globally. The construction of the Punatsangchhu projects has further destroyed the habitat of the Heron, and pushed it – and its predators – into a much smaller area, endangering it further. Only one of the existing projects – Kurichhu – has a fish ladder, and the reports of its working are not encouraging[4].

Some impacts of the hydropower projects are also likely to be felt far downstream, in India. For example, excessive releases from the Kurichhu project had severely impacted the Manas Wildlife Sanctuary, a World Heritage Site, downstream in India in 2004. In 2012, the 36th Meeting of the World Heritage Committee of UNESCO which is in-charge of the Convention Concerning The Protection Of The World Cultural And Natural Heritage noted that[5] the (then) proposed Mangdechhu hydropower project was likely to have serious impacts on the Sanctuary, and asked Bhutan to “…undertake an environmental impact assessment of the proposed Mangdechhu hydro-electric project…with a particular focus on measures to avoid the sudden release of excess waters, and to submit a copy of this EIA to the World Heritage Centre for review prior to making a decision on the approval of the project.” The EIA had not been submitted to the Committee till June 2014[6]. The 38th Meeting of the World Heritage Committee, held at Doha in June 2014, reiterated “its request to the State Party of Bhutan to submit a copy of the Environmental Impact Assessment (EIA) of the Mangdechhu hydro-electric project as per Decision 36 COM 7B.10, including an assessment of potential impacts on the property’s OUV and cumulative impacts in relation to the existing Kurichu dam…” Apprehensions have also been raised in the state of Assam in India that the Kholongchhu dam would cause serious risks of similar floods there.

Excavations for construction of dams, and particularly the long tunnels also generate huge quantities of muck and debris. During a visit to the Punatsangchu dams and river, this author found that much of this muck was deposited on the banks on the river itself, sometimes even encroaching into and narrowing the river channel. Albeit, flat areas for muck disposal are difficult to find in this hilly country. But this is precisely why, as the number of hydropower projects under construction increase, this problem will be aggravated.

One of the problems with the large scale tunnelling associated with hydropower projects is the disruption of groundwater flows and springs. Springs are one of the most important sources for drinking water in Bhutan. The Bhutan Government’s Long Term Plan For Water Supply Infrastructures, has noted that[7]:

“Despite the availability of surface water sources in abundance at national level, there are localized water shortages. Further, while there is lack of information on the yield of spring sources, many springs are said to be drying up.”

While the report itself indicates climate change as a possible reason, the tunnelling and blasting related to hydropower projects could also be one of the causes, and they need to be investigated. It is certain that with the acceleration in hydropower construction, such impacts would increase.

Another issue that is likely to become more and more significant in the coming years is the impact of climate change. Climate change is likely to impact the Himalayas more severely than other areas. With rapid melting of glaciers, river flows are likely to change. This will undermine the very basis on which the hydropower projects are being planned. Extreme events are likely to increase creating risks of higher floods and even dam safety. In case of Bhutan, the dangers posed by increasing frequency of Glacier Lake Outburst Floods (GLOF) are serious. GLOF events would increase the risk of catastrophic failures of dams and hydropower projects. Climate change is also likely to increase the sediment loads in the rivers, again impacting useful life of projects[8].

Bhutan does have a system of environmental impact assessment, and projects have to obtain clearance from the Government. There also seems to be an attempt to continuously improve the environmental protection regime, but important gaps remain. For example, there is increasing awareness that it is important to ensure environmental flows in the rivers, even after construction of hydropower project. The Water Act of 2011 required the National Environmental Commission (NEC) to set the minimum environmental flows for watercourses. Earlier it was set at 10% of the lean season flow. The more recent Water Regulations, adopted in November 2014, require the EIA to recommend the environmental flows, but if that is not done, prescribe a default minimum of 30% of the lean flow.

However, the environmental regime has many lacunae. In the case of environmental flows, for instance, while a default of 30% of lean season is prescribed, there is no guidance as to how the EIA will work out the flows, the criteria for the flows, and most importantly, that the flows should mimic the natural hydrograph. Moreover, the issue of implementation remains. For example, a presentation[9] made by an official of the environment wing of the Punatsanchhu-II project does not refer to any e-flows as a part of the environmental measures.

Another major lacunae in the environmental protection regime is that there are no cumulative impact assessments. With several projects being planned in a single river basin, this becomes critical. Moreover, giving the issue of climate change scant attention in designing and planning of hydropower projects leaves much to be desired, significant work on GLOF risk management notwithstanding.

But, social and environmental impacts are not the only areas of concern.

All’s not well?
The Joint Statement issued by India and Bhutan during the visit of Indian Prime Minster Modi to Bhutan in June 2014, as well as the Joint Statement issued during the visit of India’s President Pranab Mukherjee to Bhutan in November 2014 both affirm the commitment to the 10,000 MW by 2020 target.

On one side, there seems to be reluctance on India’s part in pushing ahead with the necessary pace. Bhutanese media[10] noted that an interview by the President of India omitted the mention of two of the largest projects of the 10,000 MW plan, namely the 2640 MW Kuri Ghongri and 2560 MW Sankosh projects. While the reason for this is thought to be financial constraints, the 540 MW Amochhu project has been left out due to security reasons. The President has also indicated that a more careful assessment will be done of future projects, and has called for spacing out of the projects. Financing offered by India also seems to reflect this. The earliest projects were built with 40% of the outlay as loan and 60% as grant from India to Bhutan. More recent projects have changed this to 70:30, and in some cases there may be no direct funding[11].

On the other hand, there are other concerns being expressed within Bhutan. Questions are being raised about whether there is an overdependence of the economy on one source, hydropower, and on one market, and whether hydropower is creating the kind and number of jobs that Bhutan needs.

The Eleventh Plan document of the Bhutan Government notes that “lack of economic diversification has resulted in a situation of high growth rates driven by the hydropower sector without a commensurate increase in gainful employment for a rapidly growing and educated labour force, which poses significant macroeconomic challenges.”

There are also questions about whether hydropower can meet Bhutan’s own needs. While Bhutan’s annual electricity generation is much more than its annual needs, it runs into serious shortages during winter. This is because river flows go down in this season, impacting generation. In the months of October to March, Bhutan has to import electricity from India, and in recent years this import has increased [12]. This problem can be partly addressed by energy banking with India. India’s demand is higher in summer and Bhutan’s is higher in winter, so this can provide some complementarity. Energy pooling with Bangladesh, India and Nepal, which may be available after the implementation of the SAARC (South Asian Association for Regional Cooperation) Framework Agreement for Energy Cooperation, could also help. But ultimately the long run solution that address energy security concerns would require Bhutan to go for other renewable sources of energy, including micro hydro and solar. This too will require Bhutan to diversify its energy investments. As it is, the issue of lean season hydrology is also clouding prospects of the economic benefits from further expansion of large hydro that is being planned.

Last but not the least, there are concerns that such massive expansion of hydropower would destroy the pristine river valleys, the rich bio-diversity and the beauty of the region. Bhutan is the only county in the world that has rejected GDP (Gross Domestic Product) as the main measure of development and has introduced a nuanced and well–developed, multidimensional concept of Gross National Happiness (GNH). The GNH has four pillars, two of which are sustainable socio-economic development and environmental conservation. There is now increasing fear that the focus on hydropower development as a means of achieving the former may be harming the latter.

India’s Role
While India’s role in providing financial and technical support to develop hydropower is much appreciated, there are also apprehensions being expressed about the dominance of Indian firms in the hydropower sector. It also seems that Bhutan is not happy with the quality of EIAs done by some Indian agencies like WAPCOS (a consulting company under India’s Ministry of Water Resources). It appears – though we have not been able to confirm it – that the agreements between the two countries require that WAPCOS alone can be appointed.

Whether any of these perceptions are true or not, and whether such feelings are justified or not, there is certainly the case that many of the agencies carrying out the work of planning and designing projects, preparing Detailed Project Reports (DPRs), carrying out EPC (Engineering, Procurement and Construction) work etcetera, are agencies with problematic track records in India, especially in social and environmental sectors. For instance, WAPCOS is an agency that is involved in preparation of DPRs for many projects in Bhutan, but has a record of shoddy and inadequate EIAs and basin studies in India[13]. Jaiprakash Associates, carrying out work on Punatsangchu-II and Mangdechu project, has been found to have violated statutory approvals and constructed higher installed capacity of 1200 MW against a sanctioned capacity of 1000 MW at its Karcham Wangtoo HEP in India. Records of others too are dismal as far as social and environmental aspects are concerned.

Another problem is that while India and Indian companies are virtually driving the planning and design of hydropower projects in Bhutan, they have failed to put in place measures of social and environmental assessments, public participation and transparency that are required in India (even though their implementation continues to be very weak in India). These include measures like cumulative impact assessments, basin carrying capacity studies, open public hearings, availability of EIA and other material in public domain, and opportunity for civil society to comment at various stages of the clearance processes.

India should ensure that these processes are immediately put in place for projects in which it participates. In particular, since these projects require the clearance / concurrence from Central Water Commission and Central Electricity Authority of India, why can’t they also be mandated to seek Environmental clearance along with the necessary EIAs and public hearings? This is all the more necessary and appropriate, given that downstream impacts of most projects in Bhutan are likely to impact parts of India.

A Golden Opportunity
One of the most important insights one gets from looking at hydropower development in Bhutan is that Bhutan today is poised at a critical juncture in its development trajectory. It has a unique opportunity to achieve that rare combination of having the best of both worlds, of having access to modern amenities, yet at the same time preserving its pristine environment and bio-diversity. This is because so far the damage to its ecology has been limited.

At the same time, it already has ample electricity to meet its own needs. Even after exporting much of its generation, the per capita generation in Bhutan is a good 2536 KWh (units). To compare, the per capita electricity generation in India in the same year was only around 760 units. Bhutan’s electrification rate was already 95% in 2013[14]. The under-construction projects are going to augment this power availability significantly. While there are shortages in winter, the solutions to that are likely to be non-hydro. With sufficient power already available at most other times, Bhutan should not have any urgency to develop new hydropower projects and must take a pause to undertake some reflection.

While hydropower would remain an important component of its economy, Bhutan should think about whether it’s useful to pursue further aggressive development of hydropower – at great cost to its ecology and people – for pursuit of revenues, about which concerns are being raised in terms of overdependence on one source, about whether it is meeting the needs of job creation, and which in any case does not seem to address winter shortages. Bhutan should pause and think whether it makes more sense to explore other options for revenue generation, job creation and overall development that will allow the preservation of its rich ecological heritage. It is in the enviable position of having the luxury to do so. And in doing so, it could show the world a different approach to rivers and development.

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*Shripad Dharmadhikary is an activist and researcher working on issues of water, environment and development. He works with the Manthan Adhyayan Kendra in India.
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[1] Long Term Plan For Water Supply Infrastructures, Ministry of Works & Human Settlement Department of Engineering Services, Government of Bhutan. June 2012. Page 11
[2] http://www.oecd.org/countries/bhutan/48651659.pdf ADB Project Case study
[3] It should be mentioned that many of these so called Run-of-the River projects are not really run-of-the-river, but have some storage and long tunnels, and divert significant part of the river’s flow out of the river channel.
[4] http://sandrp.wordpress.com/2014/02/02/fish-ladder-at-kurichhu-hydropower-project-bhutan-some-thoughts/
[5] http://whc.unesco.org/archive/2012/whc12-36com-7BAdd-en.pdf
[6] Point 8 on page 120 of the Decisions Adopted By The World Heritage Committee at its 38th Session (Doha, June 2014) at http://whc.unesco.org/archive/2014/whc14-38com-16en.pdf
[7] Long Term Plan For Water Supply Infrastructures, Ministry of Works & Human Settlement Department of Engineering Services, Government of Bhutan. June 2012. Page 11
[8] For a more detailed discussion of climate change, dams and hydropower projects in the Himalayas, see International Rivers’ report Mountains of Concrete. http://www.internationalrivers.org/files/attached-files/ir_himalayas.pdf
[9] http://www.globaltigerinitiative.org/download/Bhutan/TS4_Hydropower_Bhut…
[10] Kuensel Online, 7th Nov 2014 http://www.kuenselonline.com/reality-check-only-6476mw-by-around-2022
[11] For example, the Nikachhu project is to be funded by the ADB, and Druk Green Power Corporation. Rest of the finances will be raised through commercial loans from Indian banks. http://www.adb.org/news/adb-finance-second-hydropower-plant-ppp-bhutan
[12] http://articles.economictimes.indiatimes.com/2014-12-30/news/57528771_1_…
[13] See for example http://sandrp.wordpress.com/?s=wapcos
[14] http://www.adb.org/features/bhutan-s-hydropower-sector-12-things-know