Austrian Consortium Secures $77 Million Hydropower Equipment Contract

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Researched by Industrial Info Resources (Sugar Land, Texas)--Dagachhu Hydro Power Corporation Limited (DHPCL) (Thimphu, Bhutan) has awarded a $77 million contract to Austria Hydro Consortium Dagachhu, the consortium of Alstom Hydro (Wien, Austria) and Andritz Hydro (Graz, Austria), to supply electromechanical equipment for the 124-megawatt (MW) Dagachhu hydropower project in Bhutan. DHPCL is a special-purpose vehicle established by Druk Green Power Corporation Limited (Thimphu) to oversee the process of tendering and execution of the Dagachhu project. Druk Green Power is responsible for operations and maintenance of all hydropower projects in Bhutan.

Under the terms of the agreement, Andritz Hydro will undertake the supply of two units of six-nozzle Pelton turbines and allied hydraulic steel equipment. Andritz Hydro is part of Andritz AG (WBAG:ANDR) (Graz), a global conglomerate with business interests spanning steel, power, pulp & paper, and biofuels. Andritz Hydro undertakes turnkey hydropower projects, and provides engineering and design services to clients in the hydropower sector. The company also manufactures and supplies hydrogen-cooled and air-cooled turbo generators.

Alstom Hydro will provide machinery and equipment, including two 70 megavolt-ampere (MVA) generators. The firm also will supply automation, control and protection systems for the project. Alstom Hydro plans to supply most of the equipment from the company's production facilities in India, Switzerland and Austria. The firm's share of the contract is estimated to be $42.7 million. Alstom Hydro, a joint venture between Alstom SA (EPA:ALO) (Levallois-Perret, France) and Bouygues SA (EPA:EN) (Paris, France), has installed about 400,000 MW of generator and turbines packages globally. The company employs 6,000 people in 19 countries.

The $214 million Dagachhu power plant will be constructed in the southwestern district of Dagana and will have an installed power generating capacity of 124 MW. The high-pressure hydroelectric project will generate 515 million kilowatt-hours (kWh) of electricity per year. The power plant, which has received funding from Oesterreichische Kontrollbank AG (OeKB) (Vienna, Austria) and the Asian Development Bank (Manila, Philippines), is expected to begin operations by the end of 2012.

In a related development, India's Hindustan Construction Company Limited (BSE:500185) (Mumbai) has secured the Lot-I contract for the project, which includes building diversion wells, tailrace tunnels, connection, flushing and headrace channels, intake and weir, pressure and surge shafts, desilter, transformer caverns, the powerhouse, and other control systems.

The Austrian Development Corporation (ADC) (Vienna) has played a very critical role in the development of the Dagachhu hydropower project. The ADC assists nations in Africa, southeastern Europe, Asia and Central America in building and implementing projects that will further economic and social development. The ADC has had a longstanding association with Bhutan, having helped the country set up and develop several other initiatives, including the Basochhu and Rangjung hydropower plants. Alstom Hydro had supplied equipment for the Rangjung power project, as well as two 15-MVA generators and two 25-MVA generators for the Upper and Lower Basochhu projects, respectively.

The ADC has identified the Himalayan-Hindukush region as an area for sustained and focused development activity. Bhutan, which is a part of this region, has been facing challenges in infrastructure development because of the country's topography. Since 1993, the ADC has been working with various domestic and international agencies in Bhutan on projects to help develop resources in the country. ADC is assisting in the creation of policies to safeguard the rights, interests and survival of Bhutan's largely nomadic population. About 60% of the population consists of nomads who have no say in policymaking or government processes. The ADC is also involved in developing various alternate resources to provide sustainable energy supplies to the country. The ADC, in association with the United Nations Development Program (New York, New York), is carrying out a pilot study to bring down the risk of melting ice, which causes glacier lake bursts. The project involves raising awareness among the people in the area, setting up systems that provide early warning signals, and conducting technical tests and studies. This project, if successful, will be implemented in other regions in the country.

Bhutan recently signed an agreement with the Indian government to jointly execute 10 hydropower projects. The first project in this series will be the Punatsangchhu power plant. In April, Larsen & Toubro Limited (BSE:500510) (L&T) (Mumbai) secured the $256.7 million construction contract for the project. The Punatsangchhu power plant is expected to be completed in 66 months. L&T already has completed the 1,020-MW Tala hydropower plant in Bhutan.

Hydropower is the backbone of Bhutan's economy, accounting for 40% of the national income and about 25% of the gross domestic product. Most hydropower generated in the country is exported to India. Bhutan produces about 4.5 billion kWh of electricity and consumes about 530 million kWh of power per year. The country's power consumption is forecast to increase 10% annually. By 2020, Bhutan has set a target of adding 10,000 MW of additional hydropower generation.

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