The World Bank Group’s Boards of Executive Directors have approved a major financing package to expand Bhutan’s hydropower generation, support regional clean energy trade, stimulate economic growth, and create jobs. The initiative underscores Bhutan’s strategic role in advancing sustainable energy development while strengthening economic opportunities through low-carbon power exports.
At the center of the package is the 1,125 MW Dorjilung Hydroelectric Power Project on the Kurichhu River in eastern Bhutan. Once operational, the project is expected to generate more than 4,500 GWh of clean electricity annually, increasing Bhutan’s total energy production by around 40 percent and boosting energy exports by 42 percent.
The project will help address Bhutan’s seasonal energy imbalance by reducing reliance on costly winter energy imports and enabling surplus electricity exports during summer and monsoon periods, particularly to India. The resulting savings and export revenues are expected to create additional fiscal space for social spending and development investments that directly benefit the Bhutanese population.
Bhutan’s Finance Minister, Lyonpo Lekey Dorji, described the Dorjilung project as a national priority with transformative impacts on clean energy supply, economic growth, and the country’s carbon-negative commitments. He emphasized that the project’s innovative financing structure allows Bhutan to expand hydropower capacity without placing undue pressure on public finances.
Dorjilung represents Bhutan’s largest hydropower project developed under a public-private partnership, signaling a shift toward more sustainable and diversified financing models in the sector. The World Bank Group’s $815 million financing is expected to mobilize approximately $900 million in private investment, helping attract greater private sector participation in hydropower development.
According to Xavier Furtado, the World Bank Group’s Country Manager for Bhutan, the financing package brings together IDA, IBRD, and IFC resources to minimize sovereign borrowing, balance risks between public and private partners, and catalyze private investment. The approach is intended to serve as a model for future sustainable hydropower projects in Bhutan and other countries.
Beyond energy generation, the project is expected to create thousands of jobs during construction and operation, stimulate local businesses, and support livelihoods in Mongar and Lhuentse districts, which face higher levels of poverty, unemployment, and out-migration. Infrastructure improvements, including road upgrades, will also enhance access to markets and essential services for surrounding communities.
The approved financing package includes a mix of grants, credits, and loans from the World Bank Group. It comprises support from the International Development Association and the International Bank for Reconstruction and Development to the Government of Bhutan, alongside loans from the International Finance Corporation to Dorjilung Hydro Power Limited. The project company is jointly owned by Bhutan’s Druk Green Power Corporation and India’s Tata Power, reflecting strong regional and private sector collaboration in advancing clean energy development.
