New Delhi: In a landmark development, Bhutan-based Kholongchhu Hydro Power Ltd (KHPL) has signed a significant loan agreement with Power Finance Corporation (PFC), a state-owned non-banking financial company (NBFC) in India. The Rs 4,829 crore term loan agreement will finance the 600-megawatt Khorlochhu Hydropower Project in Bhutan, marking a major step in the clean energy cooperation between India and Bhutan.
Strategic Partnership and Project Details
KHPL is a joint venture with a 60% shareholding by Druk Green Power Corporation Ltd (DGPC), Bhutan’s sole generation utility, and 40% by Tata Power Company Ltd. The project is being developed in the Trashiyangtse Dzongkhag region of Bhutan and is expected to cost approximately Rs 6,900 crore, including financing charges. The project is slated to be commissioned between 2029-2030.
The Khorlochhu Hydropower Project is designed to generate 2,524 million units of electricity annually, contributing significantly to Bhutan’s energy grid and enabling the export of surplus power to India, particularly during the summer months. This development is also in line with Bhutan’s strategic energy vision, which aims to harness the country’s abundant hydropower potential.
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PFC’s Role and Cross-Border Financing
This agreement marks PFC’s first-ever cross-border financing venture in Bhutan, underscoring the growing bilateral energy cooperation between the two nations. Under the agreement, PFC will act as the sole lender to the Khorlochhu Hydropower Project, with the additional provision of a standby credit facility of Rs 950 crore.
The project will also benefit from the construction of a 145 km, 400 kV double-circuit transmission line to be built by Bhutan Power Corporation Ltd, facilitating the evacuation of power from the project to the Goling pooling station in Bhutan.
Commitment to Clean Energy Development
The project further reinforces Bhutan’s commitment to clean energy and sustainable development. Druk Green Power Corporation Ltd, the parent company of KHPL, is a key player in Bhutan’s hydropower sector. With a current portfolio of 3,473 MW of hydropower capacity, DGPC has ambitious plans to achieve 15,000 MW of hydropower and 5,000 MW of solar capacity by 2035.
This project is expected to contribute to Bhutan’s goal of being a clean energy powerhouse while simultaneously supporting India’s renewable energy targets through the export of surplus electricity.
Conclusion
The Khorlochhu Hydropower Project stands as a testament to the growing collaboration between India and Bhutan in the energy sector. With construction already underway, the project promises to be a significant contributor to the clean energy future of the region, benefiting both nations and supporting their shared goals of sustainability and energy security.
About PFC
Power Finance Corporation Limited is a premier non-banking financial company (NBFC) in India, classified as a Maharatna PSU. It primarily caters to the financial needs of the power and energy sector, including generation, distribution, and transmission. The company is also playing an increasingly critical role in facilitating renewable energy integration and energy transition projects, both domestically and internationally.
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