The Feasibility Study of the 126 MW Dagachhu Hydroelectric Project was conducted by M/s Bernard Engineers, Austria in 2006 and was approved by Royal Government of Bhutan on July 10, 2006 to develop Dagachhu Hydroelectric Project as a CDM Project. The establishment of the Dagachhu Hydroelectric Project Authority to
manage the business of development of the Dagachhu Project was approved by the Royal Government of Bhutan on April 27, 2007. Dagachhu Hydro Power Corporation Limited (DHPC) was incorporated under the Companies Act of the Kingdom of Bhutan 2000 on May 13, 2008 to undertake the construction of the project.
The Dagachhu Hydropower Project is located on the left bank of the Dagachhu river in Dagana Dzongkhag. The project site is approx. 11km upstream of the confluence of Dagachhu and Sankosh. The project is located in Kana, Khebisa and Goshi.
The Dagachhu Hydropower project uses Dagachhu, which is a tributary of the Punatsangchhu that drains into the Brahamaputra in India. The project is a run-of-the-river power plant located at the left side of the Dagachhu river between 10.5 and 20.2 kilometers upstream the confluence with the Sankosh.
The business affairs of DHPC are managed under the direction of a Chairperson and a Board of Directors nominated by the shareholders. The Chief Executive Officer of the company manages the day to day affairs under the direction of the Board.
The project was approved for implementation at an estimated cost of US$ 201.50 million, corresponding to Nu. 8.16 billion at 60:40 debt equity ratio. This is the first hydropower project in the Kingdom being financed through Public -Private partnership.
Druk Green Power Corporation holds 59% equity, Tata Power Company Limited, India 26% and National Pension & Provident Fund of Bhutan the remaining 15% of the equity. Asian Development Bank is providing loan of USD 51 million for financing the civil works; RZB, Austria is providing loan of Euro 41.23 million for financing the E&M works, and the NPPF is providing loan of Nu. 600 million.
With the award of the EPC contracts for civil and electro-mechanical works in July 2009, the project is scheduled to be completed by March 2013. However, due to poor geology encountered, formation of cavity at the pressure shaft, longer time taken in excavation of the powerhouse under poor geological condition, the cost of the project has escalated to Nu. 12, 227 million and the project is re-scheduled to be completed by April, 2014. Besides the royalty energy, all the power from the project shall be evacuated to India through a long term Power Purchase Agreement with Tata Power Trading Company Limited, India.
Clean Development Mechanism
The CDM Executive Board approved the registration of Dagachhu Project ( Project Registration No. 2746) as a CDM Project on February 26, 2010 with the crediting period defined from January 1, 2012 to December 31, 2018 (renewable). The project is estimated to generate 515 GWh of electricity annually that will provide 500,000 Certified Emission Reduction (CER) certificates for trading with a crediting period from 2012 to 2018. This is the Cross-Border Clean Development Mechanism.
The World Commission on Dam Compliance Report had been prepared. The revised PDD was submitted to UNFCCC CDM EB to incorporate the change in the installed capacity and annual energy generation.
Land Replacement and Economic Benefits
30.69 acres of private land has been acquired for the Project from 25 families and one community. All families are provided with substitute land.There is no issue of resettlement. A sum of Nu. 1,166,003.70 have been paid as compensation for crop lost in 2007 , in the year of acquisition. Since most of the project structures are underground, there is not much social and environmental impact.
The project is already bringing economic benefit to the local communities. The construction of 21 km of project road has improved access to the people of Kana, Khebisa and Goshi Gewogs. The shifting of the company’s office to Dagapela in September 2009, mobilization of contractors for roads and main works has provided commercial opportunities to the neighboring communities.
In terms of renting of houses, leasing of land, award of contracts, etc., the local communities have received the following monetary benefited from the project as of date.