The Bhutanese Leading the way.
Director of the Ministry of Energy and Natural Resources, Karma Penjor Dorji has provided an update on major hydroelectric projects and their financing during the monthly Meet-the-Press.
The Ministry is currently negotiating a hydro budget totaling 527 billion ngultrum, with discussions centered on securing 50 percent of it as loans.
Director Karma Penjor Dorji shared, “The talks with Tata for the Kholongchhu hydro project are nearing completion, with agreements set to be signed first by the Druk Green Power Corporation (DGPC) and Tata, and later with the government. Additionally, international financiers such as Adani, Reliance, and GMR are being approached for support.
The Kholongchhu project is progressing, with agreements with Construction Development Corporation Limited (CDCL) and JayPee finalized and ready to commence, contingent on completing the Tata deal.
For the 1125-megawatt Dorjilung hydropower project, he revealed a funding requirement of approximately 1.5 billion dollars. “The World Bank has committed 300 million dollars, and concessional financing options are being explored, with talks expected to conclude by year-end.”
For the Nyera Amari hydropower project and Bunakha hydropower project, the Ministry is seeking lead financing from the Asian Development Bank (ADB) and exploring other funding sources.
Recognizing hydropower as a cornerstone of country’s economic strategy, director highlighted the need to significantly ramp up generation capacity.
To meet national economic goals, government aims to achieve over 20 GW of installed hydropower capacity by 2040. The Ministry is on track to commission over 3,119 MW within the next five years through ongoing projects such as Puna-I & II, Kholongchhu, and various small hydropower projects under Phases I and II. Further development of additional hydropower projects, with a combined capacity exceeding 15 GW, is essential.
Given that hydropower alone will not meet future energy demands, government plans to develop over 5 GW of solar resources. The total investment required for these targets will surpass the budget of the 13th Five-Year Plan and potentially the 14th Five-Year Plan, necessitating an allocated budget of 527 billion ngultrum, which represents only 25 percent of the total investment needed, estimated at over 26 billion dollars.
Mobilizing the required resources presents a significant challenge but is achievable. Funding for the Punatsangchhu-I and Punatsangchhu-II projects has been committed by the Government of India. For small hydropower and solar projects, financing is almost secured from various sources, including Indian banks, the European Investment Bank, OPEC Fund, JICA, ADB, and others.
For larger projects, the Ministry is exploring a range of financing options, including bilateral and multilateral sources, EXIM financing, commercial loans, green bonds, pension funds, climate financing, infrastructure investment trusts, and public-private partnerships.
Minister of Energy and Natural Resources Gyem Tshering said, “For hydropower, we are immediately taking up P-1 and P-2 projects. We have already signed agreements with Adani for Wang Chhu and with Tata for Kholongchu. Construction for Kholonchu is set to begin by September, with a target completion date in 2026, and for Wangchu, we hope to start by the end of the year.”
