Bhutan begins pilot timber extraction for export

revenue from extraction could run between Nu 94.5 million and Nu 111.97 million

October 19, 2023 1:31 pm

timber extraction for export
revenue from extraction could run between Nu 94.5 million and Nu 111.97 million

By Thukten Zangpo

To earn foreign exchange and offset balance of trade immediately, the timber volume of 315,000 cubic feet (cft) or 0.315 million cft will be extracted from identified areas in Thimphu until December this year.

India is being seen as the biggest market.

Bhutan started its pilot project for the extraction of timber for export, involving the Natural Resources Development Corporation Limited (NRDCL) and Bhutan Board Products Limited (BBPL) from October this year.

NRDCL will extract 140,000cft—68, 629cft from Royal Thimphu College area and 71, 371cft from Hongtsho-Yuselpang, while BBPL will extract 175,000cft in Kawang (way to Barshong).

As NRDCL is also engaged in supplying timber for the domestic market, the NRDCL target would come to over 4.01 million cft for the fiscal year 2023-24.

According to the assessment report of Department of Forests and Park Services (DoFPS) under the Ministry of Energy and Natural Resources, Stop-gap interventions of sustainable timber management, about 11, 526 ha are feasible to be operated in and around Thimphu.

“The potential volume is about 2.1 million cft in standing form and 1.3 million cft in log form,” the report says.

Private loggers can engage in extracting the remaining 0.985 million cft, according to the report. However, private loggers with cable cranes are currently engaged with NRDCL in various operations until December this year.

For the export of timber, either in log form or sawn, the NRDCL or BBPL will be allocated 50 percent of the volume extracted, and the remaining 50 percent to private loggers, especially Association of Wood-based Industries (AWBI).

Given the estimated floor price for logs at production depot at Nu 187 per cft, the total revenue generated through royalty on timber in standing form comes at Nu 7.8 million.

At the same time, with estimated price of export of timber in log form at Nu 300 per cft and Nu 522 per cft in sawn form at the port of exit, Bhutan could earn foreign exchange revenue of Nu 94.5 million if exported in log form and Nu 11.97 million if exported in 25 percent sawn form and 75 percent in log form.

According to the report, the scientific thinning of forests around the country is important to ensure healthy forests and contribute to the national economy.

Given the current capacity in the country to extract timber, value-add and export, the report says that the period until December this year should be taken as a readiness phase to sandbox mechanisms, review and change regulations and policy, initiate capacity-building and explore focused markets.

In the medium-term, from 2024-2026, DoFPS has assessed a total potential area of 208, 065 ha for silvicultural thinning, which could yield a total log volume of 10.7 million cft annually.

From 2024, the government wants to engage private parties to create an experiential learning process related to export and secure markets to achieve export of the 10.7 million cft.

President of AWBI, Phuntsho Wangdi, said that AWBI currently has more than 100 members.

“Private sector has to come up with strategic plans from January 2024 to venture into extraction at par with NRDCL’s production,” he said, “We can handle this efficiently, if we get policy support from the government.”

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