Bhutan and the World Bank have signed financing agreements worth 515 million dollars for the 1,125 MW Dorjilung Hydroelectric Power Project. |
Thimphu: Bhutan has moved ahead with one of its largest infrastructure and energy investments after signing key financing agreements for the Dorjilung Hydroelectric Power Project, a development expected to reshape the country’s clean energy landscape over the coming decades. Major Clean Energy PushThe Dorjilung Hydroelectric Power Project will have a generation capacity of 1,125 MW and is projected to produce more than 4,500 GWh of clean electricity every year. Located on the Kurichhu River in eastern Bhutan, the project is expected to address the country’s seasonal energy shortages during winter while creating surplus electricity for exports to India during summer and monsoon months. Bhutan’s government described the project as a cornerstone of the country’s 13th Five-Year Plan and a major step toward sustaining its carbon-negative status. Economic Benefits Expected
The hydropower plant is expected to increase Bhutan’s GDP by 2.4 percent while generating jobs and business opportunities across sectors including manufacturing, tourism and small enterprises. Officials said revenues from electricity exports could later be reinvested into health, education and infrastructure development. The project is also expected to reduce regional carbon emissions by displacing 3.3 million tons of CO2 annually through cleaner energy generation and cross-border electricity trade.
Innovative Financing StructureThe project carries an estimated cost of 1.7 billion dollars and is structured as a public-private partnership aimed at limiting Bhutan’s sovereign borrowing burden. Earlier this year, the World Bank Group approved 300 million dollars in concessional financing through the International Development Association, including a 150 million dollars grant, along with 215 million dollars from the International Bank for Reconstruction and Development. The International Finance Corporation may additionally provide up to 300 million dollars to Dorjilung Hydro Power Limited, the special purpose vehicle jointly owned by Druk Green Power Corporation and Tata Power. Tata Power Strengthens RoleTata Power CEO and Managing Director Dr Praveer Sinha said the financing agreements marked a major milestone for the project and highlighted its importance for regional energy cooperation between India and Bhutan. Tata Power holds a 40 percent stake in the project through the joint venture structure.According to the company, nearly 80 percent of the plant’s annual electricity generation will be supplied to India to help meet rising summer demand while supporting Bhutan’s clean energy export ambitions. Officials also noted that the financing structure could attract an additional 900 million dollars in private investment over time.Disclaimer: This article is based solely on the press release and company filing dated May 5, 2026. No external reporting, independent verification or additional sources have been used in preparing this article.