World Bank Approves Financing for Tata Power’s Bhutan Hydropower Project
Filing Summary
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 Druk Green Power Corporation (DGPC). The project will generate over 4,500 GWh of electricity annually, with 80% supplied to India. The financing includes a $150 million grant and a $150 million credit from the International Development Association, alongside loans from the International Bank for Reconstruction and Development and the International Finance Corporation. Tata Power Trading Company Limited will manage power import and distribution in India.
The World Bank Group has sanctioned long-term financing for the 1,125 MW Dorjilung Hydropower Project in Bhutan. This project is a joint venture between Tata Power and Bhutan’s Druk Green Power Corporation (DGPC), with Tata Power holding a 40% stake. The project is expected to generate over 4,500 GWh of clean electricity annually, with approximately 80% of this output supplied to India. This initiative is part of a broader effort to enhance regional energy cooperation between India and Bhutan.
The financial package for the project includes a $150 million grant and a $150 million credit from the International Development Association (IDA). Additionally, the International Bank for Reconstruction and Development (IBRD) has provided a $15 million enclave loan to DGPC and a $200 million enclave loan to Dorjilung Hydro Power Limited (DHPL). The International Finance Corporation (IFC) has also extended a $300 million loan to DHPL. The remaining funding requirements will be sourced from various market participants.
The project will be developed under a public-private partnership model, marking it as Bhutan’s largest hydropower project of this kind. The scope of the project includes the construction and operation of the hydropower facility, which will significantly increase Bhutan’s installed energy capacity by nearly 40%. The project will also involve Tata Power Trading Company Limited, a wholly owned subsidiary of Tata Power, which will be responsible for importing the power into India and managing its distribution.
The approval from the World Bank underscores confidence in the project’s technical and financial foundations. It highlights the potential for regional partnerships to deliver shared economic and environmental benefits. The project is expected to create significant employment opportunities during both the construction and operational phases, stimulating local entrepreneurship and supporting livelihoods in the Mongar and Lhuentse districts of Bhutan.
The project is set to commence following the approval, with Tata Power and DGPC focusing on delivering sustainable value for all stakeholders involved. The collaboration between these entities and the World Bank reflects a commitment to advancing South Asia’s clean energy landscape.
Druk Green Power Corporation is a key player in Bhutan’s energy sector, focusing on the development and management of the country’s hydropower resources. The company aims to enhance Bhutan’s energy export capabilities and contribute to regional energy security.
Tata Power is a leading integrated power company and part of the Tata Group, India’s largest multinational business conglomerate. The company operates a diversified portfolio of 15.9 GW, spanning renewable and conventional energy generation, transmission, distribution, and trading. Tata Power is committed to achieving Net Zero by 2045 and has a significant focus on clean energy generation, constituting 44% of its total capacity.