Khorlochhu Hydro Power Limited (KHPL), a special purpose vehicle for developing the 600 MW Khorlochhu Hydropower Project in Bhutan, today signed the INR/Nu. 48.29 billion loan agreement with Power Finance Corporation Ltd (PFC), India’s leading NBFC in the power sector. The agreement also provides for a further standby credit facility of INR/Nu. 9.50 billion.
This landmark transaction marks PFC’s first cross-border financing in Bhutan and highlights the growing clean energy cooperation between India and Bhutan. Under the agreement, PFC will be the sole lender to the project.
At the signing ceremony that was attended by Lyonpo Leki Dorji, Finance Minister, Lyonpo Gem Tshering, Minister for Energy & Natural Resources and Deputy Chief of Mission, Embassy of India, and many others; Dasho Karma Tshering, Secretary, Ministry of Energy & Natural Resources highlighted the event as below:
“It is a historic moment in Bhutan’s hydropower journey, marking not only the financial closure of a mega project, but also the dawn of a new era of project-based financing. This model will drive the Royal Government’s bold vision of achieving 25 GW of renewable energy by 2040. This agreement reaffirms our shared commitment to sustainability, regional cooperation, and the transformative power of clean energy.
The Khorlochhu Project is a testament to innovation and resilience. It embodies both the complexities and possibilities of a new chapter in Bhutan-India hydropower cooperation. The journey to this day, Bhutan and India share an extraordinary, time-tested friendship, with hydropower as its beating heart. Together, we are not merely generating electricity but we are generating prosperity, sustainability, and shared growth. As energy markets evolve and policy frameworks transform, our partnership is well-positioned to reach new heights, and PFC’s role as a trusted key lender will be pivotal in turning Bhutan’s renewable energy aspirations into reality”.
Smt. Parminder Chopra, Chairperson & Managing Director, PFC said:
“This hydropower project holds strategic significance for the region, driving climate-aligned energy transitions and deepening cross-border energy cooperation. Bhutan’s monsoon-driven hydropower complements India’s seasonal demand peaks, providing stable, round-the-clock clean energy.”
The Khorlochhu Hydropower Project, located in Trashiyangtse Dzongkhag, is expected to generate 2,524 million units annually. It will help meet Bhutan’s winter demand and enable export of surplus energy to India during the summer months. Commissioning is targeted for 2029–2030 at an estimated project cost of INR/Nu. 69.00 billion. Construction has already commenced, with civil contracts awarded and works underway since January 1, 2025. Power evacuation will involve a 145 km 400 kV double-circuit transmission line from the project to the Goling pooling station, which is to be constructed by Bhutan Power Corporation Ltd.
Dr. Praveer Sinha, CEO & MD, Tata Power, said:
“We extend our gratitude to PFC for financing this landmark clean energy initiative. With the support of the Royal Government of Bhutan and the Government of India, our partnership with DGPC advances the region’s clean energy vision while strengthening energy security.”
Dasho Chhewang Rinzin, Managing Director, DGPC, said:
“We greatly appreciate this partnership with PFC to develop the Khorlochhu project, which was made possible through the unstinting support of the Government of India. The project reflects a shared commitment between DGPC and Tata Power towards sustainable development of Bhutan’s immense renewable energy potential and energy security for Bhutan and India. Tata Power and DGPC had already finalized the Shareholders and Power Purchase agreements for their next strategic partnership project, the 1,125 MW Dorjilung project. With the infrastructure works already started, the major civil contracts for the Dorjilung project were planned to be awarded within the first quarter of 2026.”
The partnership between DGPC and Tata Power is among the largest clean energy collaborations in Asia, set to boost Bhutan’s GDP through energy exports, infrastructure development, and job creation, while reinforcing India’s energy transition and regional energy security.
