The World Bank Group has approved an US$815 million debt package for the Dorjilung Hydroelectric Power Project in the Kingdom of Bhutan.

Dorjilung is Bhutan's largest hydropower initiative developed under a public-private partnership model. It is a joint venture between Bhutan's Druk Green Power Corporation ( 60% ) and Tata Power ( 40% ), India's largest private integrated power company, operating through a special purpose vehicle ( SPV ) called Dorjilung Hydro Power Limited.

The World Bank’s financing package includes a US$150 million grant and a US$150 million credit from the International Development Association ( IDA ), and a US$15 million enclave loan from the International Bank for Reconstruction and Development ( IBRD ) to the Government of Bhutan, as well as a US$200 million IBRD enclave loan and a US$300 million A loan from the International Finance Corporation ( IFC ).

The 1,125-megawatt run-of-the-river project, comprising six units of 187.5MW each, is being developed on the Kurichhu River in Mongar, Bhutan. Designed with a six-hour pondage for peaking, it will generate more than 4,500 gigawatt-hours of clean electricity annually, increasing the country’s energy production by 40% and energy exports by 42%.

According to the World Bank, the project will help close Bhutan’s seasonal energy gap, eliminating the need for costly energy imports in winter and generating surplus energy during the summer and monsoons to export to India when domestic energy demands in Bhutan are low. The project is slated for commissioning in September 2031, and 80% of its generation will be supplied to India.

Model for the future

“The World Bank Group is bringing the full strength of its institutions – IDA, IBRD and IFC – to support the Dorjilung Hydroelectric Power Project in Bhutan,” comments Xavier Furtado, the World Bank Group’s country manager for Bhutan.  “We’ve worked with the Royal Government of Bhutan to put together a financing package designed to keep sovereign borrowing to a minimum, catalyze private sector engagement, and carefully balance risks among public and private stakeholders. This approach can serve as a model for future sustainable hydro development in Bhutan and other countries.”

“The Dorjilung Hydroelectric Power Project is a national priority and will be transformational for Bhutan – delivering clean electricity, spurring economic growth and advancing our carbon‑negative commitment,” says Bhutan’s finance minister Lyonpo Lekey Dorji. “Its innovative financing structure ensures that this project does not unduly burden public finances, allowing us to continue investing in our people."

On completion, the SPV will become an associate company of Tata Power, strengthening its strategic presence in the Himalayan renewable energy corridor. Tata Power already holds a 26% stake in the Dagachhu Hydro Power Project, and a 40% stake in the under-implementation 600MW Khorlochhu Hydropower Project.

“The Dorjilung project reinforces our commitment to accelerating clean energy development in the region“, says Tata Power managing director and chief executive officer Praveer Sinha. “As Bhutan’s largest hydro project under the PPP model, it is designed to fully support Bhutan’s domestic energy aspirations while also enabling the export of surplus clean power to India, strengthening regional energy security.”

Tata Power and DGPC plan to jointly develop 5,000MW of clean energy capacity in Bhutan, which is aligned with the country’s national priorities and India’s net-zero ambitions.