World Bank backs Tata Power's biggest Bhutan hydro play; India to soak up 80% output

The World Bank Group has approved long-term financing for the 1,125 MW Dorjilung Hydropower Project in Bhutan, co-owned by Tata Power and Bhutan’s Druk Green Power Corporation (DGPC), according to an exchange filing.

80% of power to be supplied to India

The project is being developed through Dorjilung Hydropower Ltd (DHPL), a special purpose vehicle in which DGPC holds a 60% stake and Tata Power owns the remaining 40%. Once operational, the project is expected to generate over 4,500 GWh of clean electricity

annually, with around 80% of the power to be supplied to India. Tata Power Trading Company, a wholly owned subsidiary of Tata Power, will import the electricity into India and manage its onward distribution.

World Bank clears multi-layered financing package

The approved financing package includes a $150 million grant and a $150 million credit from the International Development Association (IDA), along with a $15 million enclave loan from the International Bank for Reconstruction and Development (IBRD) to DGPC. In addition, DHPL will receive a $200 million IBRD enclave loan and a $300 million loan from the International Finance Corporation (IFC). The remaining funding requirements will be met through market borrowings, the filing said.

Bhutan’s largest hydropower project under PPP model

Dorjilung will be Bhutan’s largest hydropower project developed under a public-private partnership (PPP) model and is expected to increase the country’s installed power capacity by nearly 40%, strengthening Bhutan’s position as a key exporter of clean energy. According to the exchange filing, the project is also expected to generate significant employment, support local entrepreneurship, and benefit communities in the Mongar and Lhuentse districts.

Also Read: India commissions first unit of 2,000 MW largest hydroelectric project

The approval follows Tata Power’s announcement on November 21 that it had signed commercial agreements with DGPC for the development of the project. Dorjilung will be implemented as a run-of-the-river hydroelectric project comprising six units of 187.5 MW each on the Kurichhu river in Bhutan’s Mongar district, with six-hour pondage designed to support peaking requirements.

Under the agreement, Tata Power has committed an equity investment of about ₹1,572 crore, to be infused in tranches as per the agreed structure. With an estimated total project cost of ₹13,100 crore, Dorjilung will be Bhutan’s second-largest hydropower project and the country’s largest hydro project under the PPP framework.

The project is also expected to generate significant employment during construction and operations, support local entrepreneurship, and benefit communities in the Mongar and Lhuentse districts, according to the exchange filing.

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