Tata Power to invest Rs 1,572 crore in Bhutan's Dorjilung Hydro Project

Tata Power will invest Rs 1,572 crore to acquire a 40 per cent equity stake in a special purpose vehicle (SPV) that will develop the 1,125 MW Dorjilung hydro power project in Bhutan, based on a total project cost of Rs 13,100 crore.

According to the regulatory filing, the SPV is yet to be incorporated and the transaction does not fall under related party transactions at this stage. Upon completion, the SPV will become an associate company of Tata Power and subsequently a related party.

"This project will support the company to accelerate its clean and green energy transition," Tata Power stated. The shareholders’ agreement specifies that the first tranche of the acquisition must be completed within six months.

The Khorlochhu project has secured a loan agreement of Rs 4,829 crore with Power Finance Corporation. CEO and MD, Praveeer Sinha, commented, "Tata Power is very well positioned to expand further with 10 GW of clean capacity underconstruction including a healthy pipeline of 5 GW Hybrid and FDRE projects." He further stated, "Withproposed amendments to the Electricity Act, Tata Power is well positioned to expand itsdistribution footprint to 40 million consumers by 2030." The company’s backward-integrated solar manufacturing units are currently operating at full capacity.

The acquisition in Bhutan forms a key part of Tata Power’s medium-term strategy to accelerate its clean and green energy transition through large-scale international projects. The terms and conditions of the agreement with Druk Green Power Corporation Limited outline the structure for the multi-phased investment, with all parties anticipating the SPV’s incorporation and the execution of the shareholders’ agreement.