The World Bank has approved long-term financing for Bhutan’s 1,125 MW Dorjilung Hydropower Project, giving a major boost to the Bhutan hydropower PPP project and deepening clean energy ties between Bhutan and India. Dorjilung Hydro Power Limited (DHPL) is developing the project through a joint venture between Druk Green Power Corporation, which holds 60%, and Tata Power of India, which owns 40%. Once completed, Dorjilung will generate over 4,500 GWh of electricity each year. This output will raise Bhutan’s installed power capacity by almost 40%. About 80% of the energy will flow to India through Tata Power Trading Company Limited. The financing package totals around $815 million. It combines support from IDA, IBRD, IFC, and private lenders. This approval shows strong confidence in the project’s design and finances. It also gives both partners long-term clarity as construction moves ahead.
Dorjilung is Bhutan’s largest hydropower project under a public-private partnership model. The structure allows Bhutan to keep majority ownership while Tata Power brings technical experience and market access. The World Bank Group has committed a mix of grants and loans. These include $150 million in IDA grants, $150 million in IDA credits, and a $15 million IBRD enclave loan to Bhutan. In addition, IBRD will provide $200 million, while IFC will contribute $300 million directly to DHPL. Other investors will cover the remaining costs. As a result, the Bhutan hydropower PPP project shows how blended finance can unlock large infrastructure while limiting pressure on public budgets. During construction, the project will create thousands of jobs. At the same time, local businesses in Mongar and Lhuentse districts should see higher demand for services and supplies.
Dorjilung builds on decades of power cooperation between Bhutan and India. Hydropower exports already form a major part of Bhutan’s economy, and Dorjilung will expand this role. Compared with coal-based generation, the project will avoid millions of tonnes of carbon emissions over its lifetime. Meanwhile, India gains access to reliable clean power as electricity demand continues to rise. Tata Power Trading Company will handle imports and distribution within India. Through this arrangement, the Bhutan hydropower PPP project supports climate goals in both countries while improving regional energy security. Moreover, the partnership highlights how cross-border PPPs can deliver shared economic and environmental benefits when backed by strong institutions and multilateral lenders.
Beyond hydropower, Dorjilung reflects a wider shift toward PPP-led infrastructure across South Asia. Governments now use PPPs to deliver projects in transport, water, healthcare, and renewable energy while managing fiscal risks. Bhutan’s approach mirrors similar efforts in India and Nepal, where private investment complements public oversight. For Bhutan, Dorjilung means more than added megawatts. It signals growing confidence in PPP frameworks and international financing. The project will support livelihoods, encourage local enterprise, and build technical skills during operations. As construction progresses, Dorjilung stands as a clear example of how governments, development banks, and private companies can turn policy goals into bankable projects with real community impact.
