Recognizing the importance of hydropower as a key pillar of development, the government will secure an additional funding of Nu 527 billion (B) for increasing the hydropower generation capacity to 3,119 Megawatts (MW) over the next five years.
An official from the Ministry of Energy and Natural Resources (MoENR) said that the budget will not be used from the budget allocated for the 13th five-year plan (FYP), but financing will be done from other sources.
The official said, “We are on track to achieve over 3,119 MW within the next five years by commissioning ongoing hydropower projects (Puna-I & II, Kholongchhu, and small hydropower projects under Phase I and II). Additionally, we must initiate the development of several hydropower projects concurrently, with a total additional generation capacity of over 15 GW,” the official said, adding that hydropower alone will not suffice to meet the demand for energy, hence the ministry plans to develop over 5 GW of solar energy as well.
“Substantial investment is required to achieve these targets. Given the investment size, which will far exceed the 13th FYP outlay, possibly even the 14th FYP, we have allocated a budget of Nu 527B outside the 13th FYP. This budget represents only 25% of the total investment over USD 26B needed to achieve the target of 20 GW.”
The official said that the ministry is currently working with several overseas financial institutions and strategic partners, exploring various financing options for the hydropower projects.
He said that the ministry is in discussion with Indian Banks, Asian Development Bank (ADB), World Bank, and European Investment Banks (EIB), and have almost secured finance from those banks. Apart from existing donor agencies, the ministry is also discussing with EXIM Financing Bank, the bank that deals with exports and imports of their businesses, supporting others with financing.
From within the donor agencies, the ministry is exploring green loans, public loans, and climate financing and divestment.
The official also said that the ministry is reviewing the policy related to hydropower at the same time. The official exclaimed that looking at the current hydropower policy of the country, there is no involvement of the private sector in the hydropower sectors. “Under the new policy, we are planning to offer up 49% of the hydropower projects’ work to private entities through private-public partnerships.”
Meanwhile, in the 13th FYP, the government has allocated Nu 1.3B for the power sector. The government also plans to start construction of ten larger hydropower projects in the 13th FYP and is expected to generate more than 10,000 MW of electricity.
The projects are set to be initiated starting with the 1,125 MW Dorjilung and the 180 MW Bunakha storage scheme projects. The World Bank has been requested to lead the financing consortium for these initiatives, which is expected to kick off by October next year and completed by October 2031.
For the 600 MW Kholongchhu hydropower project in Trashiyangtse, it is planned to be initiated by the TATA Company from India. It will be developed in a single phase. The project is expected to enter into commercial operation in 2025. At the same time, the Dorjilung HEP is seeking support from the World Bank, which has committed USD 300M towards the initiative.
For the 180 MW Bunakha project, the ADB has been requested to lead the financing consortium, with construction expected to begin in February 2026 and completion targeted for February 2032.
The ten large hydropower projects include 404MW Nyera Amari, 600MW Kholongchhu, 1,125MW Dorjilung, 180MW Bunakha, 900MW Wangchhu, 363MW Khomachhu, 170MW Dangchhu, 770MW Chamkharchhu-I, 2,585MW/4,060MW Sunkosh, and 2,800MW Kuri-Gongri. The 1,125MW Dorjilung and 180MW Bunakha storage scheme projects will be executed first.
By Nidup Lhamo, Thimphu
