“The Dorjilung hydroelectric power project is a cornerstone of Bhutan’s 13^th Five-Year Plan and will be the Kingdom’s largest hydropower project developed under a public-private partnership. This transformational investment will supply clean energy, spur economic growth, and advance our carbon-negative commitment,” said Dasho Tshering Tobgay, Prime Minister of Bhutan. “This project is a testament to our strong partnership with the World Bank Group and our shared vision for a sustainable and prosperous future for Bhutan’s people.”

The project, located on the Kurichhu River in eastern Bhutan, will generate over 4500 GWh/y of clean electricity, closing Bhutan’s seasonal energy gap during the winter months and providing surplus power for export to India in the summer and rainy season.

The hydropower plant is expected to increase Bhutan’s GDP by 2.4%. It will generate economy-wide benefits, create direct and indirect jobs, as well as entrepreneurial opportunities for Bhutan. It will boost manufacturing, tourism, and small businesses by supplying reliable and affordable electricity, with the revenues from energy exports available for reinvestment in essential services such as health, education, and infrastructure. It will also have an important regional impact by displacing 3.3 million tpy of carbon dioxide and facilitating clean energy trade.

“The Dorjilung hydroelectric power project involves an innovative financing model, which brings together public and private capital and sets a new standard for sustainable infrastructure development in Bhutan” added Johannes Zutt, World Bank Vice President for the South Asia Region. “Besides providing affordable and reliable power to support growth and job creation, the project will reduce energy import costs and increase energy export revenues for Bhutan, while also lowering carbon emissions and diversifying energy sources across the South Asia region.”

“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,” commented Lyonpo Lekey Dorji, Finance Minister of Bhutan. “Its innovative financing structure ensures that this project does not unduly burden public finances, allowing us to continue investing in our people.”

“This project marks a transformative shift in Bhutan’s energy sector and opens the door for scaling this financing model across the hydropower sector,” stated Dasho Chhewang Rinzin, Managing Director of the Druk Green Power Corp. (DGPC). “This project is designed to provide critical grid flexibility, allowing us to manage seasonal shortfalls while maximising export revenues. We are deeply committed to the project’s rigorous environmental standards and maintaining Bhutan’s standing as a carbon-negative country.”

Earlier this year, the World Bank Group’s Board of Executive Directors approved US$300 million in concessional financing from the International Development Association (IDA), of which US$150 million is a grant; US$215 million in financing from the International Bank for Reconstruction and Development (IBRD); and up to US$300 million from the International Finance Corp. (IFC) to Dorjilung Hydro Power Ltd (DHPL), which is a special purpose vehicle entity jointly owned by Bhutan’s Druk Green Power Corp. (60%) and Tata Power (40%), India’s largest private integrated power company. The project will boost clean energy co-operation between India and Bhutan and strengthens regional energy security.

Dr Praveer Sinha, CEO&MD Tata Power, exclaimed: “We thank the Royal Government of Bhutan, the World Bank Group, and Druk Green Power Corp. for their partnership in advancing the 1125 MW Dorjilung project. Today’s signing of US$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 co-operation. With nearly 80% of its 4500 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 estimated US$1.7 billion project is structured as an innovative public-private partnership to minimise sovereign borrowing. The financing is expected to catalyse an additional US$900 million in private sector financing. This unique financing structure enables Bhutan, with only US$150 million direct credit exposure, to cover the US$1.7 billion project cost and cumulatively earn about US$4 billion of revenues through taxes, free power, and equity dividends over the 30-year IDA credit period.

Dasho Leki Wangmo, Finance Secretary, Dasho Chhewang Rinzin, Managing Director, DGPC, Ugyen Namgyal, Interim CEO, DHPL, and Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, signed the US$300 million IDA financing and US$215 million IBRD financing on behalf of Bhutan and the World Bank, respectively. The signing ceremony took place in the presence of the Prime Minister of Bhutan and the South Asia Region Vice President of the World Bank.

“Amid global fuel supply disruptions, the Dorjilung Hydroelectric Power Project represents a model for building energy security that is clean, sustainable and resilient,” concluded Xavier Furtado, the World Bank Group’s Country Manager for Bhutan. “The World Bank Group brought together IDA, IBRD, and IFC to deliver an innovative financing package that enables a project of this scale while protecting Bhutan’s debt sustainability.”

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