Bhutan's KHPL Secures Rs 4,829 Crore Loan from PFC for 600 MW Hydropower Project
Kholongchhu Hydro Power Ltd (KHPL) secured a Rs 4,829 crore term loan from Power Finance Corporation (PFC) for its 600 MW Kholongchhu Hydropower Project in Bhutan. The project, costing Rs 6,900 crore, is a joint venture between Druk Green Power Corporation Ltd (60%) and Tata Power Company Ltd (40%). Construction began in January 2025, with commissioning expected in 2029-2030. The project aims to generate 2,524 million units of electricity annually, meeting Bhutan's winter demand and allowing surplus export to India in summer.
*this image is generated using AI for illustrative purposes only.
Kholongchhu Hydro Power Ltd (KHPL) has taken a significant step forward in its 600 MW Kholongchhu Hydropower Project in Bhutan by securing a substantial term loan agreement. The company has signed a Rs 4,829 crore loan deal with Power Finance Corporation (PFC), marking PFC's first venture into cross-border financing in Bhutan.
Project Details and Financing
The Kholongchhu Hydropower Project, with an estimated total cost of Rs 6,900 crore including financing charges, is set to bolster Bhutan's power generation capacity. Key aspects of the financing agreement include:
- A term loan of Rs 4,829 crore from PFC
- An additional standby credit facility of Rs 950 crore
- PFC serving as the sole lender for the project
Joint Venture Structure
KHPL is structured as a joint venture with the following ownership:
| Shareholder | Ownership |
|---|---|
| Druk Green Power Corporation Ltd | 60% |
| Tata Power Company Ltd | 40% |
Project Timeline and Impact
The ambitious hydropower project is already underway:
- Construction has commenced with civil contracts awarded
- Works have been ongoing since January 1, 2025
- The project is expected to be commissioned in 2029-2030
Once operational, the Kholongchhu Hydropower Project is projected to generate 2,524 million units of electricity annually. This significant output is expected to:
- Meet Bhutan's domestic winter demand
- Enable surplus power export to India during summer months
Strategic Importance
This project represents a milestone in cross-border energy cooperation between Bhutan and India. It not only addresses Bhutan's energy needs but also contributes to the regional power dynamics by enabling power export to India.
The involvement of Tata Power Company Ltd in the joint venture underscores the project's importance and the growing interest of Indian companies in international power projects.
As the project progresses, it will be interesting to observe its impact on Bhutan's economy and its role in strengthening energy ties between Bhutan and India.
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