SKV Law Offices has represented Tata Power Company in forming a strategic partnership with Druk Green Power Corporation (DGPC) to develop the 600MW USD8.24 billion Kholongchu Hydropower project in Bhutan.
“We had to work with our Bhutanese counterparts to develop the structure and some of the policies around which this investment could be finalised,” managing partner Shri Venkatesh told India Business Law Journal.
“Not only did we have to navigate the complex set of regulations that govern cross-border investment and the sale of power between India and Bhutan, this was also one of the first transactions of its kind in Bhutan (especially for the size of the investment).”
Located on the Kholongchhu river in eastern Bhutan, the project supports Bhutan’s goal of achieving 15GW of hydropower capacity by 2040. It will boost Bhutan’s energy security and provide clean power for India, building on the existing collaboration between Tata Power and DGPC in the 126MW Dagachhu Hydropower Plant, which is also in Bhutan.
“We anticipate that the structure that was developed for this transaction may be used as a base by the Bhutanese regulators for other similar investments in the future, and we are proud to have been part of it,” said Venkatesh.
The project has a five-year construction timeline, involving a 40% equity investment by Tata Power in Kholongchu Hydro Energy Limited. All statutory approvals are secured, allowing construction to commence.
“It was an absolute pleasure working with Shri Venkatesh, Pranav Bhaskar, and their team on the transaction in Bhutan,” said Praveer Sinha, CEO and managing director of Tata Power.
“Their firm, characterised by its youthful energy and dynamic approach, demonstrated exceptional commitment and expertise.
Together, we were able to achieve the desired results efficiently and effectively, reflecting the high standards we uphold at Tata Power.”
DGPC is a wholly owned subsidiary of Druk Holding and Investments. Established in 2008, DGPC was formed through the merger of the country’s former hydropower corporations.
The Hydro Review weekly newsletter said, “The current financing strategy involves a debt-equity ratio of 70:30, with 70% secured from the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), Indian institutions specialised in energy sector investments. The remaining 30% equity will be sourced from capital markets, ensuring a robust financial foundation for the project’s resumption.”
