WASHINGTON, January 22, 2026-The World Bank Group's Boards of Executive Directors today approved a financing package to increase the Kingdom of Bhutan's hydropower generation, facilitate regional clean energy trade, expand economic opportunities, and create jobs.
The 1,125 MW Dorjilung Hydroelectric Power Project, located on the Kurichhu River in eastern Bhutan, will generate more than 4,500 GWh of clean electricity annually, increasing the country's energy production by 40 percent and energy exports by 42 percent.
The project will help close Bhutan's seasonal energy gap, eliminating the need for costly energy imports in winter, and generating surplus energy during the summer and monsoons to export to India when domestic energy demands in Bhutan are low. The savings and revenues from the project will create fiscal space for social spending and other investments to benefit the people of Bhutan.
"The Dorjilung Hydroelectric Power Project is a national priority and will be transformational for Bhutan-delivering clean electricity, spurring economic growth and advancing our carbon‑negative commitment," said Lyonpo Lekey Dorji, Finance Minister, Royal Government of Bhutan. "Its innovative financing structure ensures that this project does not unduly burden public finances, allowing us to continue investing in our people."
Dorjilung will be Bhutan's largest hydropower project developed under a public-private partnership, marking a shift to a more sustainable financing model for hydropower development and paving the way for greater private sector investment in the hydropower sector. The World Bank Group financing of $815 million will mobilize about $900 million from private investors.
"The World Bank Group is bringing the full strength of its institutions-IDA, IBRD and IFC-to support the Dorjilung Hydroelectric Power Project in Bhutan," said Xavier Furtado, the World Bank Group's Country Manager for Bhutan. "We've worked with the Royal Government of Bhutan to put together a financing package designed to keep sovereign borrowing to a minimum, catalyze private sector engagement, and carefully balance risks among public and private stakeholders. This approach can serve as a model for future sustainable hydro development in Bhutan and other countries."
The project will create thousands of jobs during the dam construction and operation; catalyze local enterprises; and support livelihoods in Mongar and Lhuentse Districts, which face higher poverty, unemployment and out-migration than the national average. The project will also upgrade roads and enhance access to markets and essential services for local communities.
The World Bank Group financing package includes a $150 million grant and a $150 million credit from the International Development Association (IDA) and a $15 million enclave loan from the International Bank for Reconstruction and Development (IBRD) to the Government of Bhutan, as well as a $200 million IBRD enclave loan and a $300 million A loan from the International Finance Corporation (IFC) to Dorjilung Hydro Power Limited (DHPL). DHPL is a Special Purpose Vehicle entity owned by Bhutan's Druk Green Power Corporation (60 percent) and Tata Power (40 percent), India's largest private integrated power company.
