Bhutanese private sector will get to participate in hydropower sector for the first time. Druk Green Power Corporation will be floating Initial Public Offering for the public by 2016. IPO is the initial public offering where the Bhutanese can invest in Nikachu Hydropower Project.
Druk Green Power Corporation will invite Initial Public Offering worth Nu.1B from Bhutanese public for the 118 MW Nikachu Hydropower Project.
The IPO will be about 23-25 percent of the total project.
“We are in the process of preparing the prospectus, which will then need to be approved by our shareholders, DHI and government,” said DGPC’s Managing Director, Dasho Chhewang Rinzin.
He said Bhutan will also have to approve the prospectus before DGPC offer the IPO in case of Nikahcu project. “When the public looks at us and sees that DGPC is generating lot of revenues and much of it is being declared as dividends to the government, I assume that the public and the private sector think the returns on hydropower are good and they would like to invest also.” Dasho said because of their interest, they thought, they should start offering IPO on a trial basis.
However, the National Council Member of Gasa, MP Sangay Khandu feels otherwise. He says IPO in hydropower may not benefit majority of Bhutanese in a longer run.
He said they have been made to understand there have been requests and intents, from some corners of the society for public, to invest in hydropower sector. MP Sangay Khandu said while the project may have its own reasoning, he has not found any logical reasoning as to why IPO needs to be submitted to the government.
“Like I said, first the general idea that the hydropower is a strategic sector and therefore its ownership should, be as far as possible, by the government and state and it should benefit as many Bhutanese as possible.”
MP Sangay Khandu also said IPO may not really create employment opportunities or knowledge transfer to the Bhutanese. If floating IPO in the hydropower sector is a way to strengthen the private sector, Sangay Khandu thinks, it will only allow a few investors to own the shares eventually.
He also expressed concerns of fronting issues.
Dasho Chhewang Rinzin said there are statutory authorities within Bhutan which looks into fronting and while the lookout of DGPC also would be to see that the benefit of the shares they offer stays with the Bhutanese as far as Nikachu is concerned.
“When the bigger picture of fronting and all those comes, I suppose it will be the responsibility of statutory authority like MoEA to ensure such fronting does not take place when they are investing in project like Nikachu and others. It’s something that is beyond the control of DGPC.”
With the floating of IPO in Nikachu, private investors will be holding about 23-25 percent share meaning, they will not be able to influence the tariff for the next 15 years after the commissioning of the project.
Dasho Chewang Rinzin clarified that offering of IPO is not because of financial constraints but because of interest from the people.
Nikachu Hydropower Project is to be completed by early 2019.
