The Royal Government of Bhutan and the World Bank on Tuesday signed financing agreements totaling $515 million for the 1,125 MW Dorjilung Hydro Power Ltd (DHPL), which is a Special Purpose Vehicle entity jointly owned by Bhutan’s Druk Green Power Corporation (60 per cent) and Tata Power (40 per cent).
The project, located on the Kurichhu River in eastern Bhutan, will generate over 4,500 GWh of clean electricity annually, closing Bhutan’s seasonal energy gap during the winter months and providing surplus power for export to India in the summer and rainy season, per a World Bank statement.
The project will boost clean energy cooperation between India and Bhutan and strengthen regional energy security, it added.
“This transformational investment will supply clean energy, spur economic growth, and advance our carbon-negative commitment,” said Dasho Tshering Tobgay, Prime Minister of Bhutan.
Praveer Sinha, CEO & MD, Tata Power, said, “Today’s signing of $515 million in financing agreements marks a momentous milestone for a project that will contribute nearly one-third of Bhutan’s generation. This landmark project will strengthen regional energy security and deepen India–Bhutan clean energy cooperation.”
“With nearly 80 per cent of its 4,500 GWh annual generation supplied to India, it will help meet rising peak demand especially in summer while enabling Bhutan to expand clean energy exports for shared economic benefit.”
The World Bank said the estimated $1.7 billion project is structured as an innovative public-private partnership to minimize sovereign borrowing. The financing is expected to catalyze an additional $900 million in private sector financing.
This unique financing structure enables Bhutan, with only $150 million direct credit exposure, to cover the $1.7 billion project cost and cumulatively earn about $4 billion of revenues through taxes, free power, and equity dividends over the 30-year IDA (International Development Agency) credit period, World Bank said.