… the project is estimated to cost Nu 54.4B 

Dechen Dolkar 

The Druk Green Power Corporation (DGPC) will construct the 600MW Kholongchhu Hydro Energy Ltd which will be financed through a debt-equity ratio of 70:30.

The DGPC is trying to arrange 70 percent of debt financing through Power Finance Corporation (PFC), and Rural Electrification Corporation (REC), both GoI non-banking financial institutions that invest in the energy sector in India. 

DGPC will have to arrange a 30 percent equity component, which the company hopes to raise through the capital markets. 

DGPC took over the 50 percent shareholding of SJVNL in January this year to become the sole owner of Kholongchhu Hydro Energy Ltd, the special-purpose vehicle created to construct and operate and maintain the project. 

The project is estimated to cost around Nu 54.40B at the 2024 price level. 

The officials from the project said that in May this year, a due diligence team from PFC and REC visited Bhutan. The closure of the debt-financing is expected to materialise between June and July 2023. 

The project officials also said that they are pursuing PFC and REC for debt-financing, which works out as Nu 38B but with financing charges, this could exceed Nu 50B.

The project officials also said that in the hope that the financial closure can be achieved within June-July 2023 and construction activities restarted immediately, the contracts for the major civil works packages such as the dam, head race tunnel, and powerhouse have been kept alive. 

“The consultancy agreement with WAPCOS has also been kept alive but under the suspended mode,” project officials said.

However, officials said that no major construction activities are taking place at the site, DGPC has a small group of officers at the site to watch the completed infrastructure as well as to continue and complete the construction of balance infrastructure works such as the roads, construction of power, and colony (residential and non-residential). 

However, officials said that at present they are under negotiation on the modality of repayment with the PFC and REC.

The project officials said that most of the energy will be consumed within the country during winter months. “We are working with the GoI for the sale of the summer surplus power to India.”