Tata Power Receives $515 Million World Bank Approval for Bhutan Hydroelectric Project

Bhutan and World Bank Sign $515 Million Financing Agreements for Dorjilung Hydroelectric Power Project

The government of Bhutan and the World Bank signed two financing agreements worth $515 million on Tuesday for the 1,125 megawatt Dorjilung Hydroelectric Power Project. The project, 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, is being developed under a public-private partnership.

According to the World Bank, the project in eastern Bhutan 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. 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. The World Bank had earlier 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.

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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.

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According to India's apex power sector planning body, the Central Electricity Authority, peak demand in 2026-27 may reach a record 271 GW. 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.