Energy issues and Socio-economic issues in Bhutan

Hydropower project and environmental impacts!

2014-11-14T12:50:00.002+06:00

Hydropower is said to be the most mature and lowest-cost renewable energy technologies (Hydropower roadmap, IEA, 2012). Hydropower system are said to provide great opportunities for sustainable energy supply. Here in Bhutan, the Hydropower sector is considered the enclave sector of the Bhutanese economy and it contributes around 17% to the national revenue of Bhutan (National Revenue Report, DRC - 2013). Acknowledging this fact, the Royal Government of Bhutan (RGoB) planned for an ambitious target of harnessing 10,000 MW by 2020. So we can clearly see the drivers for the accelerated hydropower development in Bhutan is the need to generate enough revenue so as to carry out other developmental activities in Bhutan. A total of ten hydropower projects are identified which is expected to cost more than Nu 800 billion (http://www.kuenselonline.com/of-geological-surprises-delays-and-dprs). As on date three mega hydro projects viz: the 1200 MW PHPA I, 1020 MW PHPA II and the 720 MW MHPA are already half way through the construction phase and are expected to commission by late 2017 or early 2018. These three projects are financed through an Intergovernmental Model with a loan to grant ratio of 70:30 by the Government of India. Another two hydropower projects namely the 118 MW Nikachu and the 600 MW Kholongchu are in the early stage of construction phase. In line to the bilateral agreement between the RGoB and the Government of India (GoI), the electricity generated by these hydropower plants will be exported to India after catering to the domestic demand of Bhutan. Hitherto around 75% of the power generations in Bhutan are being exported to India.

Now we shall discuss a bit about the socio-environmental impacts of hydropower construction activities in Bhutan. Though the hydropower in Bhutan are said to be run-of-the river scheme, yet the construction of hydropower project involves lots of environmental clearances and acquisition of private and government land. Substantial land use and land use change occur during the construction of hydropower projects. For instance as per the provision of the Detailed Project Report (DPR), the construction of the 720MW Mangdechhu Hydroelectric project acquired 28.47 hectares of private land and 296.68 hectares of government land. This translates to a specific land requirement of around 452 acres per megawatt. In fact the entire landscape falling within the boundary of the hydropower project changes to a large extent, see Fig. 1. The International Energy Agency (IEA) states that like any other significant change within natural settings, hydropower has implications for landscape and associated environmental impacts (IEA, 2012). In the Hydropower Roadmap, the IEA discusses on the five prominent barriers to hydropower development and likely enabling factors (IEA, 2012). The IEA recommends hydropower development following internationally accepted sustainability approaches. The decomposition of vegetation in the water impoundment is said to emit methane. While some prefer smaller hydropower plants, some argue that the environmental issues arising from myriad of smaller plants could be more than that caused by a single large plant. To overcome such confusion and contradictions, the International Hydropower Association (IHA) and UNESCO’s International Hydrological Programme (UNESCO-IHP) launched the UNESCO/IHA GHG Research Project – entitled GHG Status of Freshwater Reservoirs. The project came up with a publication on GHG Measurement Guideline (IHA, 2010).

The construction of Dam for diverting the river do impact the aquatic eco-system both down-stream and up-stream (Fig. 2). The water storage in the dam leads to submergence of vegetation which is said to emit methane gas, an important Greenhouse Gas (GHG). Lots of cements and steel structures are used for construction of various components of hydropower project such as the dam, head race tunnel and the power house caverns.

Fig. 1. Surface excavation (courtesy: MHPA) Fig.2. Dam (courtesy: DGPC)

The transmission lines for power evacuation of the hydroelectricity also leads to lots of tree felling along the route alignment.

As per the provision of the DPR, hydropower project keep 1% of the total project cost for environment and ecology management and restoration. Detail environmental impact assessment (EIA) are said to be carried out during the project feasibility study. However as per voices raised by the local community and environmentalists, the ground reality on the socio-environmental impact of hydropower construction may require assessment in line to the environmental management plan of the concerned hydropower project. The excavation, drilling, blasting and dumping of the mucks occur in a day to day basis which causes lots of environmental pollution. With hundreds of heavy trucks transporting construction materials and carrying mucks from excavation area to the dumping yards, makes the road dusty and bumpy. During the formulation of the power system master plan of Bhutan, potential hydropower sites were selected based on the Multi-criteria decision making methodology (DoE, 2004). With due respect to the expertise involved in establishing the power system master plan, I am sure adequate studies might have been already conducted with regard to the socio-environmental impacts of Hydropower development.

I guess it is the game of life – we gain something and we loss something! No energy system is perfect and no energy system is 100% environmentally benign, especially through the entire Life Cycle perspective.

Energy modeling for assessing Bhutan's carbon neutrality

2014-10-08T21:38:00.000+06:00

The QED group working as a private consulting firm is organizing an E3 conference from October 29-31, 2014 in Thimphu, Bhutan. The conference is expected to hold panels sessions on energy, economy and environment.

I shall be presenting a paper titled, "The role of energy model in understanding the E3 nexus: a case of Bhutan MARKAL model". The paper will be presenting on the energy system modeling with a planning horizon from 2005 to 2040. MARKAL is a partial equilibrium and optimization model developed and administered by ETSAP of IEA (International Energy Agency). It is a widely used model for long term energy policy analyses and energy related climate policy studies.

My paper will be elaborating on energy demand and CO2 emission from the five demand sectors viz: Residential, Commercial, Industry, Transport and Agriculture. It will be shading light on the carbon neutral situation and future scenario. MARKAL model allows user to analyze 'what-if scenarios'. Numerious plausible scenarios can be formulated and subsequent policy implications can be assessed. The paper will compare the model run result for the base case and alternative scenario with varied economic growth rates viz: 5.8% GDP growth rate for low economic growth (LEG) scenario and 8.8% GDP growth rate for high economic growth (HEG).

The sequestration capacity of the forest cover is estimated at 6309 kilotonnes of CO2 equivalent emission as per the second national communication report (National Environment Commission, 2011). At present, the CO2 emission is well below the sequestration capacity, but from 2035 it is expected to exceed the sequestration capacity even in a Business As Usual (BAU) scenario.

In the graph, 'S capacity' is the Sequestration capacity.The graph is a result from the scenario based MARKAL model run. Bhutan's bold declaration in COP15 to remain carbon neutral for all time to come is expected to face challenges 15 to 20 years down the line. In the event of sustained high economic growth, CO2 emission will be exceeding the sequestration capacity sooner.

To uphold the bold declaration, Bhutan may need to adopt low carbon energy pathways. We may bank on our forest biomass and hydroelectricity, but energy demand in the industrial and transport sectors which requires fossil fuels are increasing rapidly. The concern for our carbon neutrality was also raised in my earlier post: http://bhuyangs.blogspot.com/2010/10/can-bhutan-remain-carbon-neutral.html

Rupee Shortage and tax hikes

2014-08-04T09:16:00.000+06:00

Bhutan is said to have huge current account deficit and acute shortage of Rupee reserve. Rupee is the currency of the Republic of India which is also the trading currency between Bhutan and India. In terms of traded value of goods, India is the largest trading partner. The government attributes the rupee shortage to the out flow of Rupees from the purchase of private vehicles and purchases made in the construction sector. In light of this notion, the government had increased the sales tax for the import of vehicles and introduced green tax of 5% on the use of gasoline and diesel. The government says it is to discourage people from buying vehicles and to minimize road congestion. The government justifies the green tax on the fuels explaining that it is for conservation of environment and also to curb deflection of fuels across the border towns (cost of fuels in India is slightly higher than that in Bhutan).

Taxation is considered a tool to generate revenue for the economy. But I am yet to comprehend, how increasing the tax on vehicles can curb Rupee outflow (http://www.kuenselonline.com/inr-reserve-to-drop-with-vehicle-ban-lift/)? If we have an efficient and effective electric public transport system, then it is possible that the vehicle owners who could be marginalized due to the fuel tax may reduce travel via private cars thereby reducing fuel purchase. But certainly it is not going to happen in our case.

Past experience has shown that Bhutaneses dare to buy vehicles irrespective of the cost if debt financing is made available from the banks. Similar concern was also raised by Kuensel in its editorial section (http://www.kuenselonline.com/looking-forward-to-rising-prices/). So by allowing import of vehicles (http://www.kuenselonline.com/vehicle-import-ban-lifted-from-today/) and the banks providing vehicle loans, I am sure Rupee outflow will increase and hard currency reserve will deplete, especially given that the vehicle quota system is reinstated. Vehicle quota is a privilege treatment to the senior civil servants of grade 6 and above which empowers them to purchase vehicles without having to pay all applicable taxes. Lifting vehicle import ban is certainly a counterproductive policy measure if we are to reduce Rupee outflow.

Without having its own automobile industry and oil production, increasing the tax on these items are not warranted. And I am sure putting a heavy tax on vehicles is not the only solution to reduce current account deficit. If Bhutan has an effective and efficient public transportation system, then I would go for increased tax on private cars to de-congest road traffic especially in the urban centers.

A pie from the hands of Shri Narendra Modi

2014-06-25T10:41:00.000+06:00

On June 16, 2014, my daughter was so excited and she was narrating to me about her being in the dzong to welcome Shri Narendra Modi, the Prime Minister of India.

Here is what she got to say...................
My daughter (in brown tego) with her friend eagerly waiting for the arrival of Shri Narendra Modi, the Prime Minister of India at the courtyard of Tashichho dzong on June 16, 2014.

My lucky daughter got a chance to take a pie of cake from the hands of Shri Narendra Modi. When the PM was sharing the pie, she was opening her mouth, may be she was thinking about her birthday cake... so cute! Then she extends her hands......!

Now to share some important thing which is beyond my daughter's story telling..............
Mr. Modi laid the foundation stone for the 600 MW Kholongchu hydropower project. This will be the first such mega hydro project in eastern Bhutan.

For details on Shri Modi's visit and the general feelings here in Bhutan, you may have a look at the informative post by Mr. Yeshey Dorji in his blog: http://yesheydorji.blogspot.com/2014/06/the-agent-of-change-did-he-change.html

The hot discussion: higher tax on vehicles and fuels!

2014-06-19T13:00:00.000+06:00

The aim of vehicle tax and fuel tax is claimed by the government to correct the persistent current account deficit. If this is the aim, then not taxing the electric vehicles appears to be a biased interpretation and a willful neglect. I am not sure if changing a single factor can correct the macroeconomic issue the country is facing. I don't think the current account deficit is created solely by purchase of vehicles. How can we correct current account deficit, when our current budget is more than the capital component of the annual budget? Nonetheless the progressive revision of taxes on vehicles is appreciated, albeit the drastic increase.

If the aim is to discourage purchase of private vehicles, effective public transport needs to be in place, prior to such erratic increase in tax. A worthy reminder that our vehicle ownership is still very low; so the present congestion is attributable to inadequate parking spaces and narrow streets/roads. Regarding the issue on road congestion, reference may be made to my earlier post, 'Road Congestion in Thimphu city' dated Dec 23, 2010. Perhaps we are experiencing the same situation as other developing economies are facing!

Given the drastic increase in the tax coupled with high borrowing rate, purchase of new vehicles would be beyond reach of many people. So this current affairs will pave the way for profitable second hand vehicle businesses. The prices of old vehicles are already seeing price hikes!

The fuel tax is proposed to avoid deflection of fuels to India. If so, why not penalize those doers and spare rest of the humble citizens? If vehicles from across the border come to fill their fuel tanks from our border towns, is it not the duty of the oil distributors and the department of trade to check such leakages? Why should the entire citizens bear the cost of such deficiency in monitoring?

If electric vehicles enter in bulk numbers, it will have the potential to cause localized power supply interruptions especially during the lean season.

Intervention in the building sector

2014-03-10T10:56:00.000+06:00

Of late the need for government’s intervention in the construction sector was pondered with some of the issues such as the cost of land, the cost of borrowing money, the loan liquidation period, reviewing of Building Rules and related bye-laws etc. Proposed measures such as to strengthen and conduct research on low cost housing technologies would be very much welcome and indeed it should be spearheaded right away. To increase loan liquidation term is very much possible which can reduce the monthly repayment amount, given that the economic life of buildings are beyond 30-40 years. Measures like reducing the cost of stone, sand and timber should have been monitored ever since the establishment of NRDCL. Such measure appears to be a need of the hour when we rely too much on imported materials. However, measure like suspensions of construction of government buildings and offices and to make use of the vacant private buildings needs re-thinking. It could set unwarranted precedence in the future with house owners vying for office rentals. Today we bailout the house owners through ‘in kind’ measures, then tomorrow we may have to rescue many other private boats from sinking into the vast and unpredictable sea of open market. Private business should be left to the privates and the market forces. It would be wise to leave such up and downs in the construction sector to the market forces. Should the parliament debate on the issue and ponder their valuable time and priceless thoughts on the swings of market cycles, when we have much more crucial and prominent social issues to be resolved? The possibility of lowering the interest rate may require further deliberation upon conducting current market research.

Another measure proposed is to use fiscal and monetary policy to control land price speculation. And I guess cooling off the heated sector through reduction in money supply could be a solution to curb price speculation. If credit facilities are made easily accessible and given that the price keeps rising, potential customers tend to purchase today then wait for tomorrow, which is logical enough. And when number of buyers increase, market price tends to increase further leading to the phenomenon of price spiral which ultimately leads to charging scarcity rent on to the actual value of the goods (land in the current case). Normalizing land ownership may also have the potential to reduce land price. The surface area of Bhutan is very small and the area of land available for settlement is a mere 0.2% and that for agriculture is just 2.9% (NSB, 2012).

While house owners lament about non-occupancy, the tenants cry over sky rocketing rental charges and we all know that there are countable numbers of house owners in contrast to the ever increasing number of tenants. If we wish to buoyant the former from sinking, then we should also anchor the latter to provide the required buoyancy. If buildings remain without occupants, then it could be a signal of market saturation, provided other factors are treated to be at normal level. However whether the non-occupancy is due to the un-affordability of the aspiring tenants or the higher rents charged by the house owners or whether the banks are enjoying the high interest rate needs deeper assessment of the market. We all do know about our limited market in general and the limited affordability level in particular. Moreover in contrast to other tradable goods, housing market caters only within the national boundary, with an exception in the border towns. But at present in the border town like Phuentsholing what we are seeing is the other way round. We also got to check if the housing market is a lucrative business. With the same amount of capital investment if we set up a different business, then we will be providing employment, a crucial social challenge at present! Now if this different business fails, then will we ponder on measures to save this business? Most likely a straight NO! So similarly when we do business, we aim for profit and housing market is not an exception.

The basic economics does not appreciate policy intervention in competitive market for fear of deadweight loss and reduction of social surplus which negates pareto-efficiency. A critical review of our construction standards may also be required if our goal is to reduce the costs of building construction thereby reducing the rental charges. Since ‘we stand were we sit’, any issue or any agenda has a room for conducive debate and positive deliberation. A need to conduct a representative survey is warranted to provide data driven decision making if at all required in the present case. A close review of the BLSS 2012 could also through some light on to the issue.

World Environment Day (June 5)

2013-06-05T15:07:00.000+06:00

What have I done to observe this day? Am I vulnerable to the environmental disaster? Is Bhutan environmentally vulnerable? Does observing this day uphold ‘Environmental Conservation’, one of the four pillars of GNH?

I think these are the bigger questions that I need to understand to really appreciate this special day. And Bhutan being a GNH country took one step further by observing this day by declaring it as a pedestrian day - no vehicle movement from 8 am to 6pm! Bhutan also observed this day by planting trees. There is no wonder since Bhutan is said to have one of the strictest environmental regulation in the world. And we should not forget that we have pledge to remain carbon neutral for all times to come!

So clearly by law of the land I did observe this day by walking from my home to my office covering around 2x4 km. Is it enough? I don’t know! Did I plant a tree? No! But on June 8 I will be participating in uprooting Marajuna plants in and around the Lungtenzampa Middle Secondary School to observe this day in that School where my son is studying.

Is the world at the verge of environmental catastrophe? May not be at this juncture and I am optimistic that such thing may not happen though we collectively might have to do a better job. But if we follow our current business as usual scenario, I think our world may head for a dangerous environmental condition – resources are depleting; air, water and land are getting polluted. If we are health conscious, I think we should keep our environment safe and clean. Given that we are interdependent and we are dependent to Nature for our living, then keeping our natural environment safe and harnessing it within its ‘replenishing capacity’ should be our first and foremost duty as a dependent species. Therefore seeing things through that prism, observing environment day is totally warranted. So our daily activities of eating meals, driving to and fro, working in office, constructing our dream house do affect the environment. Does this mean that we should remain idle……….. no… not at all, for idle mind is a devil’s workshop and I am certain that we all don’t like devils. Sustainability seems to be the only solution, as clearly stated by researchers Kerk and Manuel, ‘Sustainability without quality of life makes no sense and quality of life without sustainability has no perspective!’ And I guess that is why the world is looking for sustainable development strategy ever since the formulation of Agenda 21 in 1992.

So inculcating sustainable consumption within ones individual family is a small step that shall definitely have large contribution in saving our environment. Am I crazy! Not really. In the world over, social scientists and ecologists are raising their concern. In some countries and research institutes, scaling sustainable consumption is already underway.

Energy Security

2013-03-12T11:21:00.001+06:00

Following is the summarized form of the article that appeared in the Kuensel issue of March 9, 2013; unfortunately Kuensel had edited a lot.

Energy had never played a lesser role as a key factor input in the economic development of humankind. Energy security had been the pillar of energy policy for around a century (IEA, 2007). In Bhutan, past few years had seen frequent increase in the prices of the petroleum products; the price of electricity had increased every three years. These changes reflect the essence of energy security issues. The time to time disruption in the smooth supply of LPG, increase in the domestic consumption of electricity and trends in dipping of hydropower generation are yet another situation reflecting energy security issue. Although our installed power capacity is around 1500MW firm power is 288MW only. This is yet another situation reflecting energy insecurity. Energy security concerns in Bhutan were highlighted in the Integrated Energy Management Master Plan report (DoE, 2010). In the report, our over dependence on hydropower for electricity generation and total dependence on imported oil in the transport sector were expressed as an energy security concerns. Concerns for energy security from climate change perspective were addressed in the Climate Summit, 2011 (DoE, 2011).

But what is energy security? The World Energy Assessment Report (UNDP, 1999) defines energy security as, “the continuous availability of energy in varied forms in sufficient quantities at reasonable prices”. The International Energy Agency (IEA) adopts the concept of ‘energy security’ with ‘the loss of economic welfare that may occur as a result of a change in the price or availability of energy’. Understanding energy security by these extensively used definitions reflects the huge challenges in framing sound energy policies to address energy security issues. The two quantitative approaches which are extensively used for measuring energy security are the notion of diversity and direct measure of import dependence (IEA, 2007). Energy Security is said to consists of two components: physical unavailability component and price component. Experts recommend improving energy security through improvement of system resilience by incorporating diversity and flexibility in the system.

The energy security indices calculated with data provided in the Bhutan Energy Data Directory (2007) do not reveal a comfortable energy situation, except for the negative index in the net energy import ratio. Electrification is said to have reduced the consumption of kerosene and fuelwood, whereas the demand for LPG had been rising along with rise in the income level of the people. The shortages in LPG supply will become more acute over the years with growth in the population, increase in road network (which increases access to nearby LPG depot), compounded by influx of more and more outsiders working in the ongoing hydropower projects and lot more in the up coming projects. Hydropower sector continues to remain as the main revenue generator. But it is also considered to be the enclave sector in our economy, with minimum interaction (relative to total investment) in the domestic market. The changing financing structure of the mega hydropower projects from 60:40 to 40:60 to 30:70 (grant to loan ratio) with higher interest rate and reduced repayment period shall definitely come as an increased electricity tariff. The overall economic benefits rendered by the hydropower sector and the tremendous benefits that will come from the future projects is beyond debate and contention. Yet the melting glaciers, the reduced snow fall and the variability of water inflow indeed reflects the vulnerability of our economic enclave. The scenario of receding Himalayan glaciers and snow cover will be the toughest test of time for us. The Glaciers had shrunk and the snow reserve in Bhutan had reduced by 14% in the last 8 years (kuensel issue, 2011on ICIMOD report). The NASA data do not map Bhutan in the region of attractive wind and solar energy resources. Our topography itself is a physical constraint in harnessing the free energy resources. So the challenges for us in the energy sector are tough in terms of energy source diversification and tougher in the scenario of receding glaciers and snow cover.

The adoption of long term energy planning tools which are extensively used in other countries in fact becomes imperative for Bhutan also to explore and construct energy roadmap in enhancing our energy security. We can grasp the future implications of our today’s policies, thereby helping us to come up with appropriate trade-offs. Knowing that the future is uncertain, not acting through use of our existing knowledge base would pave the way to further uncertainty.

So as we echo our GNH in the global arena for a paradigm shift in the development concept, will we be prepared to enhance our energy security, ease the apprehension of short term supply disruption especially in the oil sector and long term challenges in the scenario of glacier retreat?

The issue of Municipal Solid Waste

2011-05-10T15:40:00.001+06:00

This article was posted in the kuensel issue of May 2, 2011.

Waste generation is a growing issue, which had been highlighted in the past by Thimphu City Corporation (TCC). It is a consequence of urbanization and economic development which we cannot avoid. We should have tools in our hand to handle it. The Landfill in Memelakha which was built in 1994 is overused by now. It has been accommodating the waste generated by the residents of Thimphu for the last 16 years – it has done its duty. The waste generation of 22 MT/day in 2004 increased to 50 MT/day in 2010 giving a compound annual growth rate (CAGR) of 14.66%.

With the concern of rising Municipal Solid Waste (MSW), TCC contemplates proposals such as: getting second landfill site and privatizing waste disposal system. The second landfill will be filled up at a faster rate which could be taken as a medium term measure. Privatizing waste disposal system may just take care of the administrative burden hitherto been faced by the TCC. Something additional to these measures may be required. Something that can turn it into resource. The UNEP (2001) states that MSW won’t be a problem if we view it as a resource and manage properly. So probably we could also look at our MSW also as a resource and increase our capacity in recycling it or converting it to energy. By recycling we can reduce resource depletion and by direct combustion in incinerators, we can generate heat and electricity. There is a private agent which segregates the MSW and sends them to India for recycling. There is also a small scale waste decomposing plant in Serbithang. They are yet to show an impact on the waste reduction in the landfill site. Either these two activities have to leap one step further or else we promote ‘waste to energy’ concept. MSW can be problematic to discard because of its large volume. MSW power plants are in operation in many countries and Bhutan cannot be an exception. The Renewable Energy policy (draft version) allows project developers to venture into the business of waste to energy generation. The only thing we require is a comprehensive feed-in tariff policy such that construction, operation and maintenance of such Renewable energy technology (RET) become commercially viable to compete with the cheap hydroelectricity in Bhutan. Installation of MSW plants could lead to reduction in the piling up of waste in the land fill site and also feed in electricity to the grid.

Irrespective of winter or summer season, waste generation will always be there, therefore it can supplement the low hydro generation during winter season, though to a small quantum. The Bhutan Energy Data Directory (2007) estimates that MSW quantity of 222,244 kg/day can produce 61,406 kWh/day. Based on this estimation, the daily MSW generation of 50 metric tons in Thimphu will have the potential to produce 13,815 kWh/day. So considering the annual electricity consumption level in Thimphu in 2010, which is around 5600kWh per customer, the MSW plant will have the capacity to suffice the electricity need of around 890 customers. Unlike the seasonal variation of water in-flow, waste generation is throughout the year which gives higher plant capacity factor.

Converting waste to energy will play important role in reducing the social issue of MSW disposals arising from rapid urbanization. There will be emissions of pollutants from MSW plant which may go against our carbon neutrality dogma. However deploying MSW plant will reduce piling of waste in the land fill which could outweigh other environmental issue since piling of waste itself is an environmental issue and as a matter of fact there is always emission of methane gas from the land fill site. The emission from the MSW plant could be very insignificant given our vast carbon sequestration capacity provided by our forest cover. We reduce our MSW stockpiles and generate energy (heat and power) from waste, what else is there to look for!!

Road congestion in Thimphu city

2010-12-23T14:28:00.000+06:00

This article is posted in Kuensel issue of 11/12/2010.

Roads in Thimphu city are getting more congested day after day. You and I would not like to get stranded in traffic jam. What should we do? Shouldn’t we drive? Should we resort to riding bicycles? Or should we walk?

Transportation sector plays a vital role in the economic development of any country. And in case of Bhutan, our domestic transport demand is met by road system alone which makes it even more critical for our economic development. Infrastructures last for decades and constructing them to meet present/short-term demand alone will be a hindrance in the future. If there were rules in 2002 (Bhutan Building Rules of 2002), we are now in 2010. What happened in between? Residents parking their vehicles on the nearby public road further narrows the already narrow road (a concern cited by the Chief Town Planner), which in turn has a rippling effect at both ends of the road. A public road is a public property; you and I have the right to use it, but not misuse and create obstacle for smooth transportation. “Parking on the road side is an offence” says the Chief Town planner. Then I guess vast majority of the vehicle owners and building owners in Thimphu city are offenders. Now that the houses/buildings are already built, we cannot incorporate parking lots. Not enforcing the rule by the Authority and not abiding by the rule by the building owners were the root cause of road congestion today. Had we enforced the 2002 rule, the pressure of congested road would have been lighter. The population of Thimphu district is expected to grow by 2.2% per annum (NSB, 2005) between 2005 and 2015. Considering this growth rate and high urban population growth rate of 4.2% per annum (NSB, 2005) coupled with the massive growth of personal cars, traffic movement in and around Thimphu town would be at snail’s pace.

Today a population of 108,000 owns 27,000 vehicles which gives a very low vehicle ownership of 25% only (considering all the vehicles registered under Thimphu region are plying here in Thimphu city). Hence road congestion at this stage is a supply side constraint – road infrastructure development outpaced by transport demand. Facing road congestion at this meager level of vehicle ownership reflects myopic ingredient in our long term urban planning. Transport demand projections and effective urban planning should go hand in hand. Integrated policy packages such as efficient mass transportation system, intensified rural development, minimizing rural to urban migration, encouraging development activities in other regions and enforcing one parking space for each flat could minimize the urban road congestion in the long run. Increasing vehicle tax could be short to medium term measure. It should come up with alternative transportation facility – things should crop up together. Mobility in the economy cannot be stopped or suppressed. A typical urbanite today has higher utility/preference for personal car to other consumer durables. You and I may not purchase a vehicle today due to high tax but tomorrow with increase in personal income and more financial access we might opt to purchase a vehicle anyway. The idea of one parking space for each flat is a right move (probably little late) and should be enforced immediately. And it should be implemented at site, not just in the drawing. The cost of delay will be burdensome and if it is not enforced, then once again we will be scratching our head in the same old manner. Along with such rule (basically imposed on the end users), the concerned agencies should keep provision for expanding public roads and explore alternative transportation facility. We can explore the possibility of subways and elevated ways to supplement our existing surface road ways. Today it may not be viable, but tomorrow it will be a necessary option to decongest the surface road especially when the vehicle ownership reaches 100% and beyond.

Road congestion will no doubt lead to: increased consumption of imported fuels, more emission and wastage of time – increasing the social cost of transportation. Urban transport demand is one of the key factors leading to urban heat islanding. By then it will be dearer for both the government and the citizens alike to act and reduce congestion. We just cannot scrap old vehicles; we just cannot stop people from buying cars; we just cannot expand the roads overnight and we just cannot demolish the houses and buildings that have not provided enough parking lots. Today’s decision spells tomorrow’s condition! Rule not enforced is rule non-existent! The fruit we reap today is the seed that we sow yesterday; let’s have a better fruit tomorrow! Let’s see well planned peri-urban areas in Thimphu and less congested urban roads in other towns. The Trompons of tomorrow should strive to make our cities for people not for cars.

Can Bhutan remain Carbon neutral?

2010-10-14T09:36:00.002+06:00

It was posted in Kuensel issue of 12/10/2010, but with lots of edition. The 1st para below was totally deleted by Kuensel.

“In our pledge to remain as a carbon neutral country…….” states the Economic Development Policy (2010). And recognizing that our country is vulnerable to the impacts of the “greenhouse effect” despite our relatively insignificant GHG emission, the National Environment Commission states, “………. It is ethical, therefore, that Bhutan should recognize its obligation toward developing GHG sinks (NEC, 2000).” Can we live with this profound statement over the coming decades?

I am proud to be in a sovereign nation with 72% forest cover and which is considered to be a net carbon sequestrating country. In 1994 the forest cover and biomass stock had sequestered 3549 Gigagrams of carbon, while the total emissions from carbon emitting sources were 228 Gigagrams only – making Bhutan a net carbon sequester. However that was in 1994 when the forest cover was 72.5%; population was 564,000; GDP/capita was Nu. 14,414; industrial GDP was Nu. 1,298.00 million and number of vehicles was only around 14,000. But now number of vehicle is 48,285; population of 683,407; industrial GDP rose to Nu. 4,236.00 million. So the socio economic situation has changed greatly over the past years. And it is these socio economic parameters, the driving factors of energy consumption which subsequently leads to rising emission. Bhutan’s first GHG inventory reveals that industrial process and road transport were the two major GHG emitters where lots of fossil fuels are used, which is a concern for a nation having no petroleum reserve. And I am very sure that over the years with our aspiration for rapid economic development, growth in these two sectors will be high, leading to ever increasing energy demand with subsequent rising emission.

Besides our vision to maintain 60% forest cover for all times to come, one of the four pillars of our Gross National Happiness (GNH) philosophy emphasizes on ‘conservation of environment’. This requirement will certainly play a vital role in keeping Bhutan a carbon neutral economy. But we all know that our forest covers are getting converted to other competing land use. The Department of Forestry shows that more than 3,600 hectares of forest land have been cleared between 2003-2006 for various infrastructure development activities. Such conversion of forest land will become more rampant over the years as we build lot more mega hydro projects, expand road access, build domestic airways and other lot more development activities. Even if we can maintain 60% forest cover for all times to come, it is a reduction of 12.5%.

In the years to come with growing population and increasing GDP per capita, rapidly growing transport sector and expanding industrial sector, rapid increase in carbon emission is bound to happen. Will our forest cover alone keep our vision alive? What is our current situation? What are our long term emission reduction policies so as to remain carbon neutral? What will be the cost implications if at all we want to remain carbon neutral which may demand changes to our current energy system and land use pattern? Our geography gives as comparative advantage whereby our electricity generation is hydro based which is a renewal and clean energy source and our forest cover sequestrating carbon. Can we maximize our comparative advantages and remain as a carbon neutral country for all times to come? With these comparative advantages at our disposal, can we embark on to a hydrogen economy or else an electricity economy?

NEC highlights on devising of a robust policy for sustainable development that meets national imperatives as well as global environmental issues. Measures like afforestation in barren land and reforestation in harvested areas stated in National Environment Strategy shall no doubt help keep Bhutan a carbon neutral. But once again will this measure alone keep Bhutan carbon neutral? A simple calculation by using the data provided in Bhutan Energy Data (DoE, 2007) shows that the carbon emission in 2005 was around 356 Gigagrams. And if we move forward with the 2005 energy usage pattern and similar living style compounded with high GDP growth rate, extrapolation shows that beyond 2030, emission will exceed sequestration.

So as we move forward, as we fulfill our MDGs, as we expand our energy access, as we explore our river basins, as we come closer to one and other, can we live with the profound statement?

Foot note:-

GDP figures are in constant 2000 price;

Industrial GDP includes manufacturing, mining and quarrying.

Understanding the implications of higher electricity tariff

2010-07-22T09:45:00.004+06:00

This post is posted in the Kuensel issue of 17/7/2010. Original post is summerized here. Actually it is a response to someone who had expressed very negative future in the economy due to revised electric tariff and wrong way of comparing electricity to some subsidized fuels like kerosene, LPG and firewood.

Differentiating the affordability of electricity to that of firewood, kerosene and LPG does not make economic sense given that all these fuels are also heavily subsidized. All of us have the option to choose the type of fuel (energy) one wants to meet one’s demand. Depending on one’s income, the cost of the energy using device and the cost of the fuel, one can either use all the available fuels or stick on to few types of fuels. The energy transition theory tells that as income increases, consumers switch from inconvenient fuels to convenient fuels (for instance from firewood to kerosene to LPG which is very visible in Bhutan). Use of high value electricity for low thermal end use is technically not considered as a good practice. Kerosene and LPG are heavily subsidized and the Department of Trade says that the RGoB bears around 30% of the cost for each litre of kerosene and for each cylinder of LPG consumed in the country. And firewood! RGoB charges only royalty rate for the rural users and minimum rate for the urban users. The existing cost of these fuels (kerosene, LPG and firewood) and electricity are all distorted; I mean the market price does not reveal the true economic cost.

Because the demand for any energy is a derived demand, one just cannot compare various energy types by looking at the energy price alone. On an equivalent energy unit basis, the price of revised electricity is: Ch 24/MJ at life line block and Ch 52/MJ at next Blocks (simple average of tariff at Block II and III); for kerosene and LPG the prices are: Ch 36/MJ and Ch 58/MJ respectively. Understanding the energy ladder and realizing the service levels that can be obtained from each energy type, the figures above are self explanatory whether electricity is affordable or not. There is no doubt that the increase in electric tariff will increase our energy expenditure, but increase in revenue from higher tariff will certainly provide our government to allocate more budget in the public infrastructure development, providing more schools, hospitals, roads and bridges. Who benefits! - the entire economy.

Economists agree that by reflecting true economic cost, efficient resource allocation can be achieved. And efficient resource allocation does not tell that an economy should use a single energy type for all its energy services. I am sure that electrified households seldom use kerosene for lighting. Making energy affordable does not mean that we use that energy for all kinds of end use. The progressive tariff structure tries to fulfill some of the basic objectives of energy pricing policy: social equity, financial viability of the utility and economic efficiency. No other energy fuels in Bhutan have this kind of tariff structure; does any one of us bother?

Pegging Ngultrum and Rupee

2010-05-31T14:19:00.003+06:00

This article is inspired by someone in Kuenselonline (an online forum administered by Kuensel, a newspaper in Bhutan)who enquired regarding why should the Ngultrum be pegged to India Rupee.

This is my opinion on prefering pegging the two currencies. As you worry about inflation, you should also worry about the implications of stronger value of Nu. One should also know the benefits of pegging our own currency to Rs (the currency of our major trading partner, India). We have to import from India for our daily living, to fill up our stomach, to fill up our cars.

In the international arena, Bhutan is insignificant (except for our GNH); whereas India is influential in IT sector and energy market. As on date both the economies, Bhutan and India are doing well and both are expected to have high growth rate over the decades. My thought could be penny wise, pound foolish; however, not pegging Nu and Rs, there will be daily hassles as I perceive, forget about the macro-economic impacts:
1) Different exchange rate at different time (shopping in border areas won’t be so charming as it is now; a little bit of hassle will remain)
2) Exchange rate can shift either way (we won’t like if we loss)
3) There will be an extra accounting work in the offices (similar to one accountants do while dealing with foreign currency)
4) Lot more hassle in the electricity import and export (which can occur at range of timescale from minute to hours to days); the value of electricity imported or exported yesterday, today and tomorrow will be different; government’s budgeting plans and layout will be affected.

If our Nu is stronger than Rs, will India be equally interested to supply all we demand as it had been doing till now? Will the status of the exemplary bilateral relationship that exists between the two countries remain the same? I guess one should think beyond macro-economics. One got to understand the geo-political situation and future scenarios as well. One should also know that everything entering Bhutan even if origin from third country has to come via India. I am also sure that not pegging Nu to Rs will also have some sort of impact on outsiders (in their decision making process) who wishes to make use of our FDI policy.

Note:
Nu - Ngultrum (currency of Bhutan)
Rs - Rupee (indian currency)
USD 1 = Nu 46 = Rs 46

A visit to New York

2010-03-16T11:55:00.000+06:00

United States of America!! Wow!!. Lucky chap! I was granted the US visa for the second time. But the time to visit seemed not so right. The daily weather forecast always announces 3-6 inches of snow fall the next day. Never did I wear a hat or a cap. The chilled northerly wind blowing over the white landscape forced me to wear a woolen hat and a muffler. When I first visited this place the weather was damp and hot and one has to turn on the air-conditioner even in the night. During my stay there I have met and talked with a few bhutaneses. All of them seem to stay out of compulsion. Back home doesn’t sound ‘home sweet home’. The constant reminder of financial constraint back home, having to serve kids, relatives and a dream to own a small house drives our fellow bhutaneses to strife hard and earn DOLLAR which has a punch 46 times stronger than Ngultrum.

A flash back of my pleasant visit to NYC in February 2010 goes like this………. KLM 0867 landed in JFK and I got a very sweet hug from my better half who had been waiting so anxiously. Uh! an emotional breakdown out of happiness. I stayed around a month in Broadway, Astoria. I loved window shopping around the Steinway Street during the snowy and chilled days and the sweet nights with my love in the cozy basement. Enjoyed Losar of the Iron male Tiger year (Year 2010 in Bhutanese Calender) with a couple of Bhutaneses who are close to my wife. Starting from morning porridge, Suja dazi and a pot luck dinner, the losar celebration closed with a ‘shake your body’ and what we Bhutanese used to say, ‘Bongku dance’ (dance without steps and rhythm). Over the days spent there, I have been for shopping in Macy’s, Marshall, Century 21, etc. Watched Avatar in a cinema hall in Manhattan, mind blowing!!! Time glided by so fast. I have been to the Liberty Island during my previous visit. As time went by the thought of departure ate my mind, so cold and ruthless, pricking my very mortal heart, bringing tears to my eyes no matter how hard I try. Through my scintillating eyes I could see my darling sitting so emotional, trying her best not to cry and seem to whisper ‘please don’t go’. For a couple of minutes we embraced each other looking at each other and hiding our tears. Both of us doesn’t want the other to cry, consoling and kissing. Time and Tide waits for none. In midst of such climax, I could hear a faint announcement, ‘Boarding for the passengers travelling to Delhi in KLM….. (I forgot the number) has started from Gate…. (oh I don’t remember the gate number either).

Sweet memories seldom die, especially my memory of this ‘Jamtsho Phaka trip’ (a trip across the ocean) spent with my worthwhile wife, a loving mom to my two little darlings back home shall remain fresh deep inside my sub-conscious mind.

If there is no electricity trade between Bhutan and India

2010-03-04T13:38:00.000+06:00

I am just wondering about a situation where there is no electricity trade between Bhutan and India. Here am not bothering on the revenue and income of the Royal Government of Bhutan (RGoB) and also the benefit availed by India. Am just looking from the perspective of Bhutan power system. First thing for sure is that we won’t be constructing mega hydro power plants for want of domestic power demand and for want of huge capital. That means there would be a possibility for expanding the distributed generations (mini/micro hydro plant and other renewable source based power generation). Then the energy sector won’t be bogged down with mega hydro projects and this would avoid or reduce the emerging Dutch disease in the Bhutanese economy.

If there is no trade, we won’t be exporting/importing electricity to/from India. Then what will happen to surplus water flow during rainy season and how would we meet peak electricity demand which occurs during lean season. How would the Department of Energy (DoE) and Druk Green Power Corporation (DGPC) cope with such circumstances? If there are no mega hydro power plants, don’t you think this would lead to attracting IPPs and MPPs for mini/micro hydro plant, solar power and wind power? It is my gut feeling that installation of mini/micro hydro plant with solar and wind power back up would take its way. This would make our power system more renewable, since we won’t be submerging the land and displacing communities, were we would be truly using the natural energy sources. If there is no electricity trade with India, how economically can we use our water resource? Hydrogen energy? Who could be our potential customers? Will there be any country that will be willing to provide us with technical assistance and capital grant? How about CDM?

If there is no electricity trade between India and Bhutan, will there be negative impact on other traded items between the two countries?

climate change! do you believe???

2009-09-02T13:34:00.004+06:00

What is this climate change, the hot spot, the buzz word of the current environmental and energy issues, I dont understand!!

Some say the mean temperature is rising and that the glaciers in the himalayas are retreating.........uhhhh. If true, what will happen to the economic backbone of Bhutan??? But some say with temperature rise there will also be increase in the precipitation............ oh.. more puzzling!! There are people around us looking calm and poised, if not also smug and defiant. One can also see such kind of statement from common peole, 'People facing high energy prices and a weak economy are not going to care about hypothetical diasasters decades from now'.

One fine day, i saw in a website with a picture of undergarments strung over a rope with size decreasing over the decades from 1980 to 2005 and the picture bears a title under it, 'Prove of Global warming'... hahahahha... very funny.

Anyways majority of the people believe that the global warming is happening. Just look at the effort of Mr. Al Gore in the 'An Inconvenient Truth'

Couldn't follow Socrates

2009-06-23T14:48:00.000+06:00

‘By any means marry’ Socrates said, so bachelors (especially the chronic bachelors) try to follow the great man. Then the great man said, for ‘if you get a good wife you will be happy and if you get a bad one you will become a philosopher’.

Marriage teaches you a lot, be it a card game or meeting of two souls. For some despite daily howls at each other, together they stay till life time. For some they celebrate today, re-marry elsewhere tomorrow. For some, after decades of togetherness, both become young again and saunters off with someone young and charismatic.

You make a rope tighter, it breaks away; you keep it loose, it losses what it holds. ‘Any kind of rules does not really work’ – my experience and observation please. The basic difference is that “men are from mars and women are from venus”. This is a title of a book, but I think it is true. Men are little casual, women are little sensitive. Although both love to be loved, they express/show love in a different way. Sometimes it is the difference in the level of expectation that lets to misunderstanding, which eventually leads to separation later on. Some of these are my observation and some are my own experiences.

Whatever is said and done, I could not become a philosopher, so I married again!! Guess how the great man became a philosopher??

Life in Thimphu

2009-06-17T16:22:00.001+06:00

Life in Thimphu is entirely different from life elsewhere in Bhutan. The hustle and bustle life, where a car is a necessity which is still a comfort or luxury in other parts of bhutan as of now. Without a car you just dissolve among the dust tailing behind the plying vehicles.

Equal to or more than 50% of your monthly salary goes to the disposal income of the house owners. wondering if they had helped you during your studies and hard childhood days......!!This is a cry in the wilderness.

Go to vegetable market, you get shocked while taking out Ngultrums from your wallet and get irritated while collecting vegetables from the vendor. You wonder if the vegetable bag you brought is too big or your wallet is too thin; or is it simply price inflation or unregulated price; or is it the free market mechanism that is eating you up!!

These are unspoken facts, which I guess everybody would have something to add and comment.

Metamorphosis of my life

2009-06-17T13:34:00.001+06:00

My parents told me that I was born when there were less number of stars in the sky. of Tshangkha village...... what the bhutanese astrologers' say the day of "kam yangka". kam means star and yangka means scarce. I dont know if people of my type are scarce or things don't come in plenty for me!!

From lower kindergarten till the 8th standard, I was enjoying the WWF food package in Trongsa Juniour High School. Then in march 1994 i appeared for my ICSC examination in Zhemgang High School and in June 1996 I did qualify for B.E. Electrical in Jaipur under the GoI scholarship. Four years of course went with bread omlette, movies, roaming around pink city and frequently held Tout (alcohol in nepali) Parties. I did appear my second year and final year examinations together realizing that I have to go back to Bhutan. Nothing is easy, so I became a paper back writer for two subjects. Interesting part is that all the friends in our group were cherishing our tegetherness once again.

That time entering the job market was not so hard, rather easy, which gave me to serve my country by working as a full time engineer in the erstwhile Department of Power. Within six months of my joining I had to officiate as a Project Manager for three times........... wow lucky chap!! Since then from corporatization till now I am serving Druk Yul for its energy needs.

From January 2007 to December 2008 I was studying Energy Economics and Planning in my master's degree in the Asian Institute of Technology, Thailand. During those two years, I had been watching the beauties but never did I compromise on my duties knowing the blunders I did during my bachelor degree. Now this makes me frustrated in the routine works of Bhutan Power Corporation Ltd. (BPC).

So far so good. Self motivation I have is - the ladder of career is never crowded at the top.

Energy situation in Bhutan

2009-06-17T08:58:00.000+06:00

This is just for information only, most of us may be aware of the energy situation of Bhutan. Any updated information are most welcome.

The kingdom of Bhutan is well blessed with ample supply of hydro energy and biomass essentially fuelwood. The government policy of maintaining 60% forest cover is a very rational and logical policy. since hydro electricity export makes around 40% of the government's revenue (NSB, 2007), maintaining forest cover for sustainable watershed for perpetual water flow is very much essential.

Around 80% of hydro electricity generations are exported to india. But when it comes to final energy consumption in the country, electricity makes around 16% only (DoE, 2005) which is less than oil consumption and far less than fuel wood consumption (around 58%). Ever realized this? Without a proven oil reserve, Bhutan is 100% oil import dependent and also we rely on India only for the entire demand for oil products. So this shows that bhutanese consume only around 42% of commercial energy. Although fuel wood in urban areas have market price, that in rural areas just goes with minimal royalty tax and most of the times are collected free; only opportunity cost may be calculated.