The Bhutan government and the World Bank on Tuesday signed financing agreements worth $515 million for the 1,125 MW Dorjilung Hydroelectric Power Project, with nearly 80% of its 4,500 GWh annual generation set to be supplied to India, strengthening bilateral energy ties and regional power security.
The $1.7 billion project, Bhutan’s largest hydropower development under a public-private partnership model, is being executed through Dorjilung Hydro Power Limited (DHPL) — a joint venture between Bhutan’s Druk Green Power Corporation (60%) and India’s Tata Power (40%). Tata Power will handle power imports into India and its downstream distribution.
Praveer Sinha, CEO & MD of Tata Power, said, “This landmark project will strengthen regional energy security and deepen India–Bhutan clean energy cooperation… helping meet rising peak demand especially in summer.”
The project will generate over 4,500 GWh of clean electricity annually, accounting for nearly one-third of Bhutan’s total generation and expanding installed capacity by about 40%. It is also expected to boost Bhutan’s GDP by 2.4%, while creating jobs and supporting economic sectors such as manufacturing, tourism and small businesses.
Calling it a strategic national investment, Bhutan Prime Minister Dasho Tshering Tobgay said, “The Dorjilung Hydroelectric Power Project is a cornerstone of Bhutan’s 13th Five-Year Plan… This transformational investment will supply clean energy, spur economic growth, and advance our carbon-negative commitment.”
Located on the Kurichhu River, the project is designed to address Bhutan’s winter power shortages while enabling surplus exports to India during summer and monsoon months.
The financing package includes $300 million from IDA (including a $150 million grant), $215 million from IBRD, and up to $300 million from IFC, with the structure expected to mobilise an additional $900 million in private capital.
World Bank Vice President Johannes Zutt said the project “sets a new standard for sustainable infrastructure development,” adding it will “reduce energy import costs and increase export revenues while lowering carbon emissions.”
Bhutan’s Finance Minister Lyonpo Lekey Dorji said the structure ensures fiscal prudence. “It allows us to undertake a project of this scale without unduly burdening public finances.”
Over a 30-year credit period, Bhutan is expected to generate nearly $4 billion in revenues through taxes, dividends and free power, while limiting direct sovereign exposure to $150 million.
The project is also expected to displace 3.3 million tonnes of CO₂ annually, reinforcing Bhutan’s carbon-negative status while boosting clean energy trade in South Asia.