Tata Power to commission first unit of Dagachhu in 2013

Tata Power Company, India's largest private utility, has begun construction of its 114mw Dagachhu hydropower project in Bhutan and expects to commission the first unit in 2013.

Tata Power will build and operate the run-of-the-river project in partnership with the Royal Government of Bhutan. While state-owned agencies of Bhutan own a 74% stake in the project, Tata Power holds the remaining 26%.

"There are two units of 57mw each. It is in 2013 that the first unit will be commissioned. (And for completion of the whole project,) it's about four years," Tata Power's executive director (strategy and business development), Banmali Agrawala, told PTI here.

The $201.5 million-project has achieved financial closure through loans secured from Asian Development Bank, Austrian export credit agency, OeKB, and Bhutan's Druk Green Power Corp, the rest being equity participation.

Part of the capital has been used to award contracts for civil work and equipment, among other things.

"Major clearances (including environmental approvals) are in place. Contracts for civil work and equipment are in place as well. The design of the entire plant and all the soft part is over and work on the ground will start now," Agrawala said.  Tata Power and the Bhutanese Government have signed a long-term power purchase agreement with Tata Power Trading Company Ltd for evacuation of the generated electricity into India.

"The power would be brought to India because within Bhutan, the consumption of power is minimal so after fulfilling their local needs, all the power goes to India," Agrawala said.

Bhutan Power Transmission has agreed to provide transmission access to Bhutan border, he added.

The Dagachhu project marks Tata Power's foray into Bhutan, which has a huge potential for hydro-power generation. The utility will also foray into the hydro-sector in Nepal through an exclusive joint venture it has signed with Norway's SN Power recently.

"There clearly is a lot of potential for hydro-power in Bhutan. We are definitely open to setting up more plants in Bhutan, but it clearly depends on the pace at which the government of Bhutan would want the private sector to come in," Agrawala said.

The company is increasing its thrust on renewable energy and will invest accordingly from the Rs23,600 crore capex announced for the next three-years to increase generation capacity.

The utility presently has over 10,000mw of power plants under various stages of construction and implementation.