NewsRoyal Government of Bhutan and World Bank Sign $515 Million Financing for Dorjilung Hydroelectric Power ProjectRoyal Government of Bhutan and World Bank Sign $515 Million Financing for Dorjilung Hydroelectric Power Project
The Royal Government of Bhutan and the World Bank signed $515 million in financing agreements for the 1,125 MW Dorjilung Hydroelectric Power Project on May 5, 2026. The $1.7 billion project, a joint venture between Druk Green Power Corporation and Tata Power, aims to generate 4,500 GWh of electricity annually, boosting Bhutan's GDP by 2.4% and supporting clean energy exports to India.
*this image is generated using AI for illustrative purposes only.
The Royal Government of Bhutan and the World Bank have officially signed financing agreements totaling $515 million for the 1,125 MW Dorjilung Hydroelectric Power Project. The signing ceremony took place in Thimphu on May 5, 2026. This project is expected to account for approximately one-third of the Kingdom's total energy generation, drive economic growth through access to affordable electricity, and create new jobs.
Project Overview and Economic Impact
The Dorjilung Hydroelectric Power Project is situated on the Kurichhu River in eastern Bhutan. It is designed to generate over 4,500 GWh of clean electricity annually. This output will help close Bhutan's seasonal energy gap during the winter months while providing surplus power for export to India during the summer and rainy seasons. The hydropower plant is projected to increase Bhutan's GDP by 2.4% and create economy-wide benefits, including direct and indirect jobs and entrepreneurial opportunities.
Financial Structure and Stakeholders
The estimated $1.7 billion project is structured as an innovative public-private partnership aimed at minimizing sovereign borrowing. The financing package is expected to catalyze an additional $900 million in private sector financing. The agreements signed include $300 million in concessional financing from the International Development Association (IDA)—of which $150 million is a grant—and $215 million in financing from the International Bank for Reconstruction and Development (IBRD). Additionally, the International Finance Corporation (IFC) has committed up to $300 million.
| Funding Source | Amount | Type |
|---|---|---|
| International Development Association (IDA) | $300 million | Concessional Financing (includes $150 million grant) |
| International Bank for Reconstruction and Development (IBRD) | $215 million | Financing |
| International Finance Corporation (IFC) | Up to $300 million | Private Sector Financing |
The project is being developed by Dorjilung Hydro Power Limited (DHPL), a Special Purpose Vehicle entity jointly owned by Bhutan's Druk Green Power Corporation (60 percent) and tata power (40 percent). This unique financing structure enables Bhutan to cover the project cost with only $150 million in direct credit exposure, while cumulatively earning about $4 billion of revenues through taxes, free power, and equity dividends over the 30-year IDA credit period.
Regional and Environmental Benefits
The project is viewed as a transformational investment for Bhutan, advancing its carbon-negative commitment. It will displace 3.3 million tons of CO2 annually and facilitate clean energy trade. By supplying reliable and affordable electricity, the project aims to boost manufacturing, tourism, and small businesses. Revenues from energy exports will be available for reinvestment in essential services such as health, education, and infrastructure.
Dr Praveer Sinha, CEO & Managing Director of Tata Power, highlighted the significance of the agreement, noting that the project will contribute nearly one-third of Bhutan's electricity generation. With nearly 80% of its 4,500 GWh annual generation supplied to India, the project is expected to help meet rising peak demand, particularly in the summer, while enabling Bhutan to expand clean energy exports for shared economic benefit.
Historical Stock Returns for Tata Power
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.28% | -2.33% | +14.97% | +10.50% | +13.76% | +338.05% |
How might the Dorjilung project's PPP financing model influence the structuring of other large-scale hydropower projects across Nepal, Pakistan, and other South Asian nations seeking to attract private capital without increasing sovereign debt?
With nearly 80% of generated power earmarked for export to India, what long-term power purchase agreement terms and pricing mechanisms will determine whether Bhutan achieves its projected $4 billion in cumulative revenues over 30 years?
How could climate change-driven variability in Himalayan river flows affect the Kurichhu River's hydrology and potentially impact the project's projected 4,500 GWh annual generation capacity over its operational lifetime?
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