The Royal Government of Bhutan and the World Bank signed financing agreements totalling US$515 million (mn) for the Dorjilung Hydroelectric Power Project (the Project), a 1,125 megawatt (MW) development. The investment will supply clean electricity, support economic growth and provide about one-third of the Kingdom’s generation. The Project forms a central part of Bhutan’s 13th Five-Year Plan and will be delivered through a public–private partnership.

Situated on the Kurichhu River in eastern Bhutan, the Project will generate over 4,500 GWh annually, closing winter shortfalls and producing surplus power for export to India during the summer and monsoon seasons. Dorjilung Hydro Power Limited, the special purpose vehicle, will be jointly owned by Druk Green Power Corporation and Tata Power, with ownership split sixty per cent and forty per cent. The World Bank said the scheme will strengthen regional energy security and facilitate cross-border clean energy trade.

Officials projected the hydropower plant will raise Bhutan’s gross domestic product by 2.4 per cent and create direct and indirect employment and entrepreneurial opportunities that will support manufacturing, tourism and small businesses. Export revenue and other proceeds are intended for reinvestment in health, education and infrastructure. The Project is also expected to reduce emissions by about 3.3 mn tonne (t) of CO2 annually.

The World Bank Board approved a package including US$300 million from the International Development Association (IDA), of which US$150 million is a grant, US$215 million from the International Bank for Reconstruction and Development (IBRD) and up to US$300 million from the International Finance Corporation (IFC). The estimated US$1.7 billion (bn) Project is structured to minimise sovereign borrowing and to catalyse around US$900 mn of private financing while limiting Bhutan’s direct credit exposure to US$150 mn.

Signatories on behalf of Bhutan and the World Bank completed the IDA and IBRD documents in Thimphu. World Bank officials said the combined package enables the Project at scale while protecting Bhutan’s debt sustainability and supporting regional clean energy objectives.