Mega Projects

GoI assistance under various Five Year Plans does not include India's funding of mega projects like
hydroelectric power projects, Penden and Dungsam cement projects, Hashimara-Phuentsholing
Railway Line (the "Golden Jubilee Rail Line"), 'Total Solutions Project' (for capacity building in ICT
sector and establishment of Bhutan Institute of Medical Sciences). GOI has agreed to provide
assistance to Bhutan in developing the hydropower sector and to purchase at least 10,000 MW of
power from Bhutan by 2020. During his address to the Joint Session of the Parliament of Bhutan in
May 2008, Prime Minister Dr. Manmohan Singh informed that the total bilateral economic engagement
with Bhutan (including mega projects) over the next five years to be of the order of Rs./ Nu. 100
billion.

For developing 10,000 MW of power from Bhutan by 2020, ten hydropower projects have been agreed
during the first Empowered Joint Group (EJG) Meeting held in Delhi in March 2009. Of these 10
projects, the agreement on the implementation of the Punatsangchhu-I Hydro Electric Project was
signed between the two governments on 28th July 2007, while the DPRs (Detailed Project Reports) for
Punatsangchhu -II and Mangedechu Hydroelectric projects have been completed and implementation
agreements for these two projects is expected to be signed shortly. The agreement for preparation/
updation of DPRs the Amochhu Reservoir Hydroelectric Project (HEP), the Kuri Gongri HEP, the
Chamkharchhu-I HEP and the Kholongchhu HEP have been signed. For other 3 projects (Sunkosh
Reservoir, Wangchu Reservoir and Bunakha Reservoir), these are yet to be signed.

Some of completed/ ongoing GOI-assisted Mega Projects are:

Chukha Hydroelectric Project (CHEP)

CHEP, a 336 MW project, located on Wangchu river in Chukha district was built by India on a turnkey
basis at a remarkably low cost of Rs. 2460 million. The project has been earning precious revenue for
Bhutan through export of electricity to India and has a significant share in the internal revenue
generation of the RGoB. In 2008, it exported electricity worth Rs. 372.45 crores to India. The Chukha

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 Hydropower Corporation now runs the project.

Kurichhu Hydro-Electric Project

Kurichhu Hydro-Electric Project is a run-of-the-river 60 MW project located on Kurichhu river in

Mongar district funded by GOI at a revised cost of Rs. 560 crore (60% grant and 40% loan at low
interest rate). The project was established with the objective of providing sufficient and reliable power
to eight eastern Dzongkhags to bring about fast socio-economic development in the region. The project
was formally inaugurated jointly by the Tongsa Penlop His Royal Highness Jigme Khesar Namgyel
Wangchuck and Ambassador Sudhir Vyas in April 2006.
WAPCOS of India prepared the Detailed Project Report for the Kurichhu Hydroelectric Project and
M/s National Hydroelectric Power Corporation (India) Limited (NHPC) prepared the Pre-Construction
Report.

A Kurichhu Project Authority (KPA) was constituted for overseeing and monitoring the construction.
KPA signed a turnkey agreement with the NHPC in 1995 for execution of the project, with WAPCOS
as the Review Consultants. Hindustan Construction Company (HCC), Bharat Heavy Electricals Ltd.
(BHEL), Larsen & Toubro (L&T), and Gammon (India) Ltd were involved in executing civil and
electrical works. All four units have been commissioned. Surplus power is exported to India. Kurichhu
earned Rs. 34.90 crore as revenue from export of electricity to India in 2008.

Tala Hydro-electric Project

A run-of-the-river 1020 MW project on the Wangchu river, downstream of Chukha Hydroelectric

project, funded by GOI with 60% as grant and 40% at low interest rate at the revised cost of Rs 4126
crores. It comprises a 92m high concrete dam, a 22.2 km long water conductor system (Head Race
Tunnel), and underground power house with 6 generating units of 170 MW each, and three 440 KV
single-circuit transmission lines to the India-Bhutan border.

Water and Power Consultancy Services (WAPCOS) of India designed the project, in association with
Central Electricity Authority, Central Water Commission, Geological Survey of India and other GOI
agencies. WAPCOS are also the consultant to the project. A bilateral agreement for the execution of the
project was signed in 1996. Subsequently, an 8-member Tala Hydro-electric Project Authority (THPA)
chaired by Bhutan's Minister for Trade and Industry, was constituted to oversee the monitoring and
execution of the project. The last (28th) meeting of the THPA was held in August 2009.

All six units were commissioned during 2006-07. Surplus power is exported to India. The project
generated revenue of Rs. 728.783 crores during July 2008 - June 2009.

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Punatsangchhu-I Hydroelectric Project

A run-of-the-river 1200 MW project on the Punatsangchhu river located between 7 KM and 18.5 KM
downstream of Wangdue Phodrang Bridge. Agreement on its implementation signed on 28th July 2007
in Thimphu. The project is being funded by the Government of India with 40% grant and 60% loan at
an interest of 10% at the estimated cost of Rs. 3815 crores (December 2006 price level). Construction
of the project commenced in Nov 08 and expected completion is by Nov 2015.

Water and Power Consultancy Services (WAPCOS) of India prepared DPR for the project. WAPCOS
are also the consultant to the project. Main civil and electro-mechanical works have been awarded to
Hindustan Construction Company (HCC), Bharat Heavy Electricals Ltd. (BHEL), Larsen & Toubro
(L&T), and Gammon (India) Ltd. A Punatsangchhu Hydro-electric Project Authority (PHPA) has been
constituted to oversee the monitoring and execution of the project.

All six units were commissioned during 2006-07. Surplus power is exported to India. The project
generated revenue of Rs. 728.783 crores during July 2008 - June 2009.

Dungsam Cement Plant

Dungsam Cement Plant is a dry- process plant with an annual capacity of 1 million ton per year,
located at Nganglam in south-eastern Bhutan for which India provided Rs. 300 crore and agreed to
build required road and rail infrastructure. The various activities of the project are in full swing and the
cement production would commence from September 2011.

Penden

Located in Samtse district on Indo-Bhutan border, the Plant with an initial capacity of 300 ton per day
was funded and built with Indian assistance at a cost of Rs 142 million. It started trial production in
1980 and went commercial in 1982, having an initial capacity of 300 ton per day. Besides meeting the
entire domestic requirement of Bhutan, surplus is sold to neighbouring Indian States. Working at its
optimum capacity, the cement factory has contributed handsomely to the government exchequer (Nu
807.0 million in 2005).

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