Construction of the 600 megawatt Khorlochhu Hydro Power Project in Trashi Yangtse can now move forward at full scale. The project has secured a loan of about 58 billion rupees from an Indian government-owned financial company. The loan agreement was signed in Thimphu yesterday.
The Power Finance Corporation (PFC), India’s leading non-banking financial company in the power sector, has extended a 48.29 billion rupee loan. An additional 9.5 billion rupees was agreed as a backup fund, available if project costs exceed the original budget or if unforeseen expenses arise.
According to Druk Green Power Corporation, PFC will serve as the sole lender to the project.
The managing director of DGPC, Dasho Chhewang Rinzin said, “This is a non-recourse project financing, which means the loan repayment will come solely from the project’s revenues. There is no reliance on the government for a sovereign guarantee or other backing. This makes it a landmark project for Bhutan, the first of its kind, opening a new avenue for financing future projects in the country.”
“I think PFC is the leading financial institution in the renewable energy sector in India. And we always support the initiatives taken in clean energy transition. And Bhutan has a lot of potential for hydropower generation and also solar,” said Rajiv Ranjan Jha, the director of the Power Finance Corporation Limited, India.
Once completed by 2030, the project is expected to generate more than 2,500 million units of electricity annually.
It will provide Bhutan with reliable winter power and export surplus energy to India during the summer.
The Khorlochhu Hydropower Project is a joint venture between Druk Green Power Corporation, which holds 60 per cent, and Tata Power with 40 per cent.
“Tata Power holds a 40 per cent share in the project. As conceived, most of the power generated will be exported to India under an existing Power Purchase Agreement (PPA), which ensures revenue and profit certainty. This assurance made it possible for PFC to confidently finance the entire loan component,” said Sanjeev Churiwala, the group CFO & Chief of Strategy, Tata Power, India.
Construction of the project has already begun, with civil works underway since January this year.
Karma Wangdi
Edited by Sangay Chezom
