World Bank pumps $515 million in Bhutan's largest hydropower project

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The World Bank Group has committed $515 million to finance Bhutan’s ambition to build the kingdom's largest-ever hydropower venture to meet one-third of its energy needs.

The Dorjilung Hydroelectric Power Project, to be built on the Kurichhu River in eastern Bhutan, is estimated to cost $1.7 billion and will be developed under a public-private partnership.

India's Tata Power owns 40% of Dorjilung Hydro Power Ltd (DHPL), the company that will build and run the project. Bhutan’s Druk Green Power Corporation

owns remaining 60% of the joint venture.

Once operational, the plant is expected to generate over 4,500 GWh of electricity annually, helping Bhutan address winter energy shortages while exporting surplus power to India during the summer and monsoon seasons.

Officials say the project could raise Bhutan’s GDP by around 2.4% and create jobs, while strengthening regional energy security.

The financing package includes $300 million from the International Development Association (IDA) — half of it as a grant — and $215 million from the International Bank for Reconstruction and Development (IBRD). Additionally, the International Finance Corporation (IFC) is expected to mobilise up to $300 million to support the project’s private sector component.

"The Dorjilung Hydroelectric Power Project is a cornerstone of Bhutan’s 13th Five-Year Plan and will be the Kingdom’s largest hydropower project," the kingdom's Prime Minister Dasho Tshering Tobgay said.

The World Bank Group, in a press release, said the project will boost manufacturing, tourism, and small businesses by supplying reliable and affordable electricity.

Energy exported from the project is also expected to invest back in the kingdom's essential services such as health, education, and infrastructure.

Johannes Zutt, World Bank Vice President for the South Asia Region, said, “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”.

Praveer Sinha, CEO and MD, Tata Power, said, the project will also deepen India–Bhutan clean energy cooperation. "With nearly 80% of its 4,500 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,” Sinha said.

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