The Bhutan government and the World Bank on Tuesday signed financing agreements worth $515 million for the 1,125 megawatt Dorjilung Hydroelectric Power Project being developed by a joint venture between India’s largest private sector power company, Tata Power Co. Ltd, and Bhutan’s state-run Druk Green Power Corp. Ltd.
The project in eastern Bhutan, once completed, is set to generate 4,500 gigawatt-hours (GWh) of clean electricity every year, with 80% of this to be exported to India during the peak summer season, the World Bank said in a statement.
The project, a key part of Bhutan’s 13th five-year plan, will be the country’s largest hydropower project developed under a public-private partnership, and this investment will supply clean energy, spur economic growth, and advance the country’s commitment to carbon neutrality, said Bhutan’s Prime Minister Dasho Tshering Tobgay.
The project, which is expected to cost $1.7 billion, will boost clean energy cooperation between India and Bhutan and strengthen regional energy security, according to the statement.
Earlier this year, the World Bank approved a $300 million concessional package from the International Development Association (IDA), including a $150 million grant, along with $215 million from the International Bank for Reconstruction and Development (IBRD) and up to $300 million from the International Finance Corporation (IFC) for Dorjilung Hydro Power Ltd (DHPL), a joint venture special purpose vehicle between Tata Power and Druk Green Power Corp.
Of this, the financing agreements between the Bhutan government and the IDA and the IBRD were inked on Tuesday.
Druk has a 60% stake in the joint venture, while Tata Power has a 40% stake.
Peak power demand
The development comes just days after India’s peak power demand hit a record 256GW on 25 April, as intense heatwaves across the northwest and central regions drove up the use of cooling appliances and electricity consumption.
The peak power-demand season in India typically runs from May to June, but power demand figures reaching record highs in April 2026 exceeded Grid India’s estimates, which had anticipated peak power demand of 239.5GW for the 20-26 April week.
According to India’s apex power sector planning body, the Central Electricity Authority, peak demand in 2026-27 may reach a record 271 GW.
“Today’s signing of $515 million in financing agreements marks a momentous milestone for a project that will contribute nearly one-third of Bhutan’s generation. This landmark project will strengthen regional energy security and deepen India-Bhutan clean energy cooperation. With nearly 80% of its 4,500GWh 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,” said Praveer Sinha, managing director and chief executive of Tata Power.
The Dorjilung Hydroelectric Power Project represents “a model for building energy security that is clean, sustainable and resilient” amid the global fuel supply disruption caused by the West Asia war, said Xavier Furtado, World Bank group country manager for Bhutan. The power plant is expected to increase Bhutan’s gross domestic product by 2.4%, said the World Bank statement.
The project will allow Bhutan to provide grid flexibility to manage power shortfalls and maximize export revenues, said Dasho Chhewang Rinzin, managing director of Druk Green Power Corp.. “This project marks a transformative shift in Bhutan’s energy sector and opens the door for scaling this financing model across the hydropower sector,” he added.
