Bhutanese generally do
not save, they spend more than they earn. They even borrow to spend. So
national-debt-is-not-my-concern attitude of politicians, bureaucrats, private
individuals alike is not really shocking. Is there any other way, other than
hydropower, to service mounting Nu 120 billion credit that is on upward spiral? Which sectors have
potential to service $2.0 billion equivalent loan: agriculture,
manufacturing/industry and/or tourism? Credit, by itself, is not so much of a
concern, if the country has capacity to make the most of the loan and service
it. For us, it’s a huge “if”!
As per the Financial
Times, Japan is the most indebted nation in the world with gross debt to GDP
ratio of 245%. The figure is mind-boggling but the public still maintain calm.
The Japanese government holds large amount of assets, therefore the net debt to
GDP ratio goes down to 132%. And then Bank of Japan holds a large amount of
Japanese government bonds which, in principle, can be held forever without
having to worry about how it is going to repay. Then the net debt relative to
GDP ratio goes even further down to 80%. Some have calculated as low as 41%.
Looking at
our current standing on assets that can be beneficially traded/harnessed, we have no choice except to harness
our hydropower. It is already almost like staking the futures of our
children/grandchildren on hydropower. The arguments on “eggs in a basket” are
redundant. We can only talk about our ability to smartly harness hydropower and
move ahead securely. Yes, securely! Let us not make hydropower an issue for political gamble. Please, people of Bhutan and the region deserve better and we have to have high ability because the
hydropower, in my view, is a high risk investment. I do not buy “cost plus”
paradigm with the Government of India as risk covers, certainly not on account of the following.
First, can anyone
(including experts from both countries intensely involved in power sector) tell
us capacity factors of the Bhutanese run-of-the-river mega power plants down
the line, say in 10, 15, 20 years from now, considering water-flow variations,
seasonal as well as year to year, technological shortfall then and other human
factors? The way we import power at the moment from India in winter gives us
impression that the capacity factors of our power plants are low even now. The
capacity factor risks can be mitigated to an extent by optimizing the sizes and
types of hydropower plants. Why are we going ahead with mega run-of-the-river
power projects with high capacity factor risks? Isn’t smaller run-of-the-river
and reservoir power projects combination with high capacity factors the better
option? In terms of energy storage, power plant efficiency and energy security,
this combination is by far the better option. Shouldn’t capacity factor be one of the major considerations along with geotechnical, hydrological and environmental factors? What is the assurance that the
run-of-the-river mega power plants will not be redundant in say 10, 15, 20
years when we consider snow and glacier melt runoff by then?
Second, we need to
think ourselves as an open energy market player considering the regional (even global) power grid development. Then will our power be
competitive in an open energy market considering that the energy profile of the
world, including that of renewable energy in India, changes at a rapid pace? We better be aware of the open market forces in energy sector and prepare for the challenges. For instance, hydraulic fracturing (“fracking”)
and horizontal drilling seem to be breaking the power of the OPEC to keep the
oil price high. The brent crude is trading at $50/barrel from the high of
$145/barrel in August 2008. Goldman Sachs says $20/barrel in future is a
possibility.
Third, there are huge efforts
for paradigm shift in urban energy systems with
distributed energy generators, also called energy servers, producing
clean reliable, affordable electricity at site. Some even talk about grid
electricity as fading trend in the new energy world. Will our power plants
feeding the grids remain relevant through their economic life? Many power
systems claim they generate electricity cheaper than the power companies for
two main reasons. Firstly, their unmatched efficiency in converting fuel (e.g.
fuel cell) to electricity, meaning systems producing significantly more
electricity for the same fuel costs. Secondly, the ability to generate fuel at
site eliminates the need for costly transmission and distribution
infrastructure both physical and organizational. So much so that the savings
typically are calculated to provide a 3-5 year payback on the initial capital
investment on energy servers.
Fourth, we have to be
absolutely sure about our hydropower policy and strategy, and transform the
economic development pattern to resource, more specifically water-resource,
based model. This may involve massive reforms including redirecting investments
and entrepreneurs, and reforming, streamlining and cutting the civil service to size. The civil service needs to be free from
cronyism and corruption, and has to have strength to face, not hide, the reality on ground. Are we prepared to transform, cut and clean? The pseudo-fanaticism
piggy-backed on “cost plus” principle is bound to fall flat.
Fifth, key to above
lies on the abilities of our current and future workforce that need to be
highly educated and dynamic to take up the challenges posed by the massive
economic shift. There is no denying that the quality of our workforce is the weakest link in the development process. The IQ level of our school children are low (anyone can verify
this). Are we ready to reform education sector based on meritocracy as
fundamental ideology and principle in the education system? The education
system has to aim to identify and groom bright young students for positions of
leadership. Leadership in energy is not an easy option. Children need to be
taught manners, honesty, respect and responsibility. We may need to go beyond
to teach softer skills such as collaboration, critical thinking and creativity.
Critical factors for developing creativity in school include: (i) creating in
the classroom an environment that support creative thinking and work; and (ii)
teaching creativity skills and strategies explicitly and assessing in the
context of academic learning. Misplaced priorities in education do not produce
leaders of international level. Nationalism has its own place and should evolve
through deeper sense of respect, knowledge and substance, not through parroting
of catchphrases. The practices incubate superficiality, obliterates creativity,
and let go public interest.
