This support is the latest in a series of bilateral agreements through which Norway has enabled Bhutan to first map and thereafter be in a position to develop its hydropower resources for the economic benefit of the nation.
The low population and modest degree of energy intensive development of Bhutan, imply a limited domestic demand and a slow growth in industrial/ commercial electricity demand. With its relatively large hydropower potential, much of the generated electricity can be exported to neighbouring India in the foreseeable future. This has two distinct advantages: i) Bhutan will be able to make revenue from its natural resources; ii) India will be helped to reduce its dependence on fossil fuels.
Strengthening of the Energy Sector (Phase III)
The Goal of Bhutan’s Programme is to accelerate development of the country’s hydropower resources by improving both knowledge and managerial capacity, and thereby attracting investors for implementation of hydropower projects. This is seen as a stepping stone towards poverty reduction through economic and social development. Moreover, the Government of Bhutan has realized that improved regulatory capacity is a prerequisite for an orderly and cost-effective growth of the power sector. In this way the energy sector programme will better support the accelerated hydropower development strategy set out in the 10th Five Year Plan for Bhutan.
The specific purpose of the Norwegian supported Programme component is to ensure the availability of local expertise for planning the development of hydropower resources and strengthening of regulatory capacity in the energy sector. Phase III of energy sector cooperation between Bhutan and Norway is covered by the bilateral agreement signed in May 2008. Immediately afterwards, a contract was entered into between NVE and DoE, in July 2008, for continued institutional cooperation (July 2008 - June 2011), with a possible 2 years extension provided a positive outcome of Norad’s review and assessment of project results.
Activities and Outputs:
A Training Needs Assessment (TNA) is the basis for the staff training programmes in order to ensure that training activities are linked to the relevant institutional and organizational development issues, including defined skills requirements. Activities during 2009 include:
- Training and human resources development (various higher level education and short term courses).
- Supporting improved regulatory capacity of BEA to meet challenges related to accelerated hydropower development; Supporting DoE’s Hydromet Services Division on data provision for accelerated hydropower development.
- NVE coordination and backstopping, including co-management of project with DoE project management.
- Preparations of Annual reports and consultation meetings.
Detailed outputs during 2009 included:
- Completed formal further education at educational institutions (MSc and other courses).
- Training activities carried out by NVE within the BEA and the Hydromet Services Division, in Bhutan as well as in Norway.
- Further development of t he studies and modelling of the effects of climate change on hydropower flows.
Issues and Challenges:
Considerable efforts were made in 2009 to provide formal training (MSc, etc.) at institutions in Norway. This aim has long been pointed out by Norad in order to draw on Norway’s comparative advantage in the hydropower sciences. It has however proved challenging to achieve, especially now that the formal MSc training courses within hydropower engineering at NTNU in Norway are no longer conducted. However, it is hoped steps taken during 2009 will bear fruits in 2010. Short-term training and informal courses are, as far as possible, carried out in Bhutan in order to have an additional impact on local competence and capacity building.
Results/Outcome:
Several DoE professionals have completed MSc courses at foreign training universities and have returned to their duties in Bhutan with greatly increased competence. BEA has strengthened its capacity and, most importantly, became an autonomous authority on 1 January, 2010. This is a strong indicator of improved institutional framework achieved as part of the project. The Hydromet Services Division has increased its know-how and capacity with regard to all aspects of data management. The Division is now in a better position to provide inputs to the planning, design and operations of hydropower schemes.
Support to Specific Projects of Accelerated Hydropower Development Programme
The main purpose of this component of the Programme is, on the national scale, to support the accelerated development of the hydropower resources of the country, - within Bhutan’s overall development plan and poverty reduction strategies. The immediate objective is to facilitate accelerated hydropower development in the form of Programme finance (including specific projec ts) and power sales agreements, reconnaissance surveys for the remaining listed sites under the Power System Master Plan, pre-feasibility studies of project sites and a Detailed Project Report of one site, including environmental studies.
The bilateral agreement between Norway and Bhutan for “Support to Accelerated Hydropower Development Programme of Bhutan” was signed between the two countries on 21 May 2008, in parallel with the Phase III Energy Sector support agreement. A contract was entered into between DoE and NVE for implementation of the project during the period July 2008 through June 2011. There is a provision in the contract for a possible 2 years extension provided Norad’s review of the Project results is positive.
Planned activities within project finance and power sales agreements have been cancelled. These issues became less relevant due to the fact that India offered to plan and construct all of the first 10,000 MW of projects which formed the first part of the Accelerated Hydropower Development Program. Consequently, the Norad support has been refocused to cover projects on some of the remaining 20,000 MW of hydropower potential in the country.
Activities and Outputs:
The main activity in 2009 was the procurement of consultants to carry out the below mentioned studies. The consultant issued the Inception Report for these studies in 2009 which is the main output of the year. The contracted work, which will result in outputs during 2010, includes:
- Reconnaissance Surveys for unvisited sites under the Power System Master Plan of Bhutan (15 sites).
- Pre-feasibility Studies of project sites incl. Environmental Studies (2 sites).
Issues and Challenges:
The decision by India to become a major investor in Bhutan’s hydropower sector caused the need for some re-planning and reallocations. This was however amicably resolved between Norad, the Bhutan authorities and NVE. No major challenges or issues have otherwise been apparent in 2009, and progress on the studies is proceeding well within schedule and budget.
Results/Outcome:
At this early stage there have been no tangible results of the project. The InceptionReport on the Reconnaissance Surveys of 15 hydropower sites and the Pre-feasibility Studies of 2 hydropower sites have however been submitted, pointing out how a considerable body of additional knowledge about the hydropower potential will become available in the near future.
