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Bhutanese energy contractors urged to up their game

Publication Date : 24-05-2012

 

Bhutan Prime Minister Jigmi Y Thinley pointed out crucial aspects for Bhutanese contractors interested in taking up a hydropower project: So long as there was expertise, experience and, above all, the pecuniary reserves, there was no barring Bhutanese contractors from partaking in the hydropower projects.

That was in response to Bhutanese contractors’ submission to the government that, despite 40 or so years since the first hydropower project was built, they still could not participate in the actual construction of such a project.

Their plea, as they had submitted the government earlier, was to be allowed to undertake a hydropower construction work, without having to go through the competitive bidding process with the Indian counterparts.

A consortium, which, the last time it was established, had about 35 local contractors from various categories, contractors at the meeting on May 21 said, was in the process of being registered as a public company.

Since individual Bhutanese construction companies lacked the capacity and the money to take up a hydropower project on their own, the idea was to form such a consortium to make up for the shortcomings.

Energy department director general Yeshi Wangdi said Bhutanese contractors had neither the expertise nor the experience to take up hydropower construction works on their own.

He suggested the local contractors begin taking up sub-contract works to begin with.

"To be able to construct one dam, a contractor ought to have already constructed at least three,” he said, emphasising the need for experience. “It’s a high risk project, this hydropower, where one setback leads to another and so on.”

Druk Holding and Investment Infra chief executive officer Kinga Tshering said, while they, along with Druk Green Power corporation, had the expertise to aid the Bhutanese contractors with, it was the financial aspect that posed the main hurdle.

He said hydropower projects were normally divided into packages, and each package required between 10 billion ngultrum (US$178 million) and 50 billion ngultrum ($892 million).

If all of the more than 3,000 Bhutanese contractors pooled in resources and managed to mobilise at least 10 billion ngultrum, he said, they would be able to assist in terms of skills and expertise.

Some contractors were skeptical about many of them getting into the business together, as that would only cause misunderstandings, and invite unnecessary disputes.

"How do we decide who does what work and how the proceeds in the end are split?” one contractor said.

Lyonchhoen, however, struck a positive chord among the contractors.

He said it was gratifying to learn of the interest local contractors showed in participating in the hydropower projects and, more so, when they worked towards creating a consortium, and coming up with a proposal to take up a hydropower construction work.

“We’ll be creating our own pool of experts in hydropower sector,and the money stays within the country,” he said, adding it would be difficult on the part of the government to propose to the Indian government to award works to Bhutanese contractors, without putting them through competitive bidding process.

If Bhutanese contractors could, however, through formation of a consortium, be able to mobilise enough funds, as to be able to go through the bidding process, he said, the government could, to an extent, be able to help.

"If Bhutanese bids come somewhere close to that of the Indian’s, we can discuss terms and make possible Bhutanese participation,” Lyonchhoen said.

It eventually, he said, boiled down to finance.

"Even with the country’s entire banks put together, we may not have the kind of money to fund a hydropower project,” he said.

 

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