Druk Green Power Corporation (DGPC) has asked for a loan from the Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and other financial institutions of India to finance 600MW Kholongchhu Hydro Energy Limited (KHEL).
Nu 4.5B was spent on the project so far. The project’s total cost is estimated at Nu 54.4B at the 2020 price level.
The first joint-venture hydropower company, KHEL, is now dropped.
During the “extraordinary meeting” between DGPC and Satluj Jal Vidyut Nigam Limited (SJVNL) decided that SJVN would transfer their 50 percent shareholding in the joint venture company to DGPC.
The transfer of the 50 percent shareholding of SJVN to DGPC was completed within January 2023.
The Managing Director of DGPC, Dasho Chhewang Rinzin, said that DGPC is now the 100 percent shareholder of the company, having completed the required shares transfer and other processes through the Registrar of Companies.
“DGPC has assumed full ownership of the KHEL on an as-is-where-is basis,” the MD said.
The erstwhile joint-venture company was in negotiations for debt-financing with the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC) of India, who are financing major power projects in India.
The MD said that DGPC has already approached PFC and REC through the Government of India to consult on continuing the same support to DGPC in providing the debt-financing for the project.
“Since this is commercial borrowing, the loan amount, including interest is expected to be around Nu 45B to Nu 50B,” Dasho Chhewang Rinzin said.
However, DGPC will have to mobilise additional funds for equity-financing.
MD said that the equity-financing is estimated at Nu 16B. However, he said that the figures could change depending on how soon the project can be started, and when it gets commissioned, the figures could change.
After the joint-venture model was dropped, the shareholders agreed to stop the construction works to cut down on expenditure.
Dasho Chhewang Rinzin mentioned that DGPC is already working with the contractors who were undertaking infrastructure works at the project site and restarting and completing it at the earliest.
Dasho Chhewang Rinzin said, “This will enable the local communities to use some of these infrastructures, especially the roads and bridges and access to water and electricity supply.”
“With the commitment and support of the two governments, DGPC is optimistic to get the project back on track and complete it at the earliest.” Dasho added.