The 600-megawatt Khorlochhu Hydropower Project in Trashi Yangtse is set to move forward in full swing after securing a massive loan package worth approximately ₹58 billion from India’s Power Finance Corporation (PFC), one of India’s premier non-banking financial companies in the power sector. The loan agreement was officially signed in Thimphu yesterday, marking a significant milestone in Bhutan’s hydropower development journey.
Landmark Financing for Bhutan
Under the agreement, PFC will provide ₹48.29 billion as the primary loan and an additional ₹9.5 billion as a contingency fund to cover any cost escalations or unforeseen expenses. The financing will be extended entirely by PFC, making it the sole lender for the project.
“This is a non-recourse project financing, which means repayment will come solely from the project’s revenues,” explained Dasho Chhewang Rinzin, Managing Director of Druk Green Power Corporation (DGPC). “There is no reliance on the government for a sovereign guarantee. This makes it a landmark project for Bhutan, the first of its kind, opening a new avenue for financing future projects in the country.”
Strengthening Indo-Bhutan Energy Partnership
Rajiv Ranjan Jha, Director of Power Finance Corporation Limited, India, described the project as a testament to India’s continued support for Bhutan’s clean energy transition.
“PFC is the leading financial institution in the renewable energy sector in India. We always support initiatives in clean energy transition. Bhutan has tremendous potential for both hydropower and solar energy, and we are happy to be part of this important venture,” Jha said.
A Joint Venture with Tata Power
The Khorlochhu Hydropower Project is being developed as a joint venture between Druk Green Power Corporation, holding 60 percent of the shares, and Tata Power from India, which owns the remaining 40 percent.
Sanjeev Churiwala, Group CFO and Chief of Strategy at Tata Power, emphasized the project’s long-term commercial viability. “Most of the power generated will be exported to India under an existing Power Purchase Agreement (PPA), ensuring revenue and profit certainty. This assurance made it possible for PFC to confidently finance the entire loan component,” he said.
Promising Economic and Environmental Impact
Scheduled for completion by 2030, the Khorlochhu project is expected to generate more than 2,500 million units of electricity annually. The energy output will help meet Bhutan’s domestic power demand during the winter months while supplying surplus electricity to India during the summer season.
The project is seen as a cornerstone for Bhutan’s long-term energy strategy, contributing to economic growth, energy security, and environmental sustainability.
Construction Underway
Construction of the Khorlochhu project began earlier this year, with major civil works starting in January. With the financing now fully secured, officials say the project can proceed at full pace.
The Khorlochhu Hydropower Project represents a new chapter in Bhutan’s hydropower story—one defined not only by strong Indo-Bhutan cooperation but also by innovative financial independence and a shared vision for a clean energy future.
