REC, PFC to Finance 600 MW Hydro Electric Power Project in Bhutan

Power Ministry-backed power sector focused Navratna NBFC, REC Ltd along with state-owned Power Finance Corporation Ltd (PFC) has signed a Memorandum of Understanding (MoU) with Kholongchhu Hydro Energy Ltd (KHEL) for financing of 600 MW Hydro Electric Project at TrashiYangtse, Bhutan.

March 12, 2021. By Manu Tayal

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Power Ministry-backed power sector focused Navratna NBFC, REC Ltd along with state-owned Power Finance Corporation Ltd (PFC) has signed a Memorandum of Understanding (MoU) with Kholongchhu Hydro Energy Ltd (KHEL) for financing of 600 MW Hydro Electric Project at TrashiYangtse, Bhutan.

KHEL has been a joint venture (JV) company of SJVN (India) and Druk Green Power corporation Ltd (Bhutan). It was set up with 50:50 partnership by the two companies with an aim to develop Kholongchhu Hydro Electric Project with 600 MW of capacity in Eastern Bhutan.

The MoU was signed in the presence of Sanjay Malhotra, CMD - REC, RS Dhillon CMD - PFC,  NL Sharma, CMD - SJVNL and Yeshi Wangdi Chairman KHEL, along with SK Gupta, Director (Technical), REC Ltd, Ajoy Choudhury, Director (Finance), REC Ltd and TSC Bosh, Executive Director, REC Ltd and other senior officers.

The project is being executed in line with an inter-governmental (IG) agreement signed between the Government of India (GoI) and the Royal Government of Bhutan (RGoB) in April 2014 to undertake implementation of 4 hydroelectric projects in Bhutan via a Joint Venture model to be formed by public sector undertakings (PSUs) of the two governments.

KHEL is the first Joint Venture Company being undertaken between the two governments for implementation of 4x150 MW Kholongchhu Hydro Electric Project.

KHEL has signed a Concession Agreement with The Royal Government of Bhutan dated June 29, 2020 for a concession period of 30 years.

Moreover, the project has been proposed to be funded in debt-equity ratio of 70:30 and as per the MoU, REC would be extending Rupee Term Loan of Rs 2,029 crore. While, the balance debt would be extended by PFC Rs 2,029 crore, NPPF, Bhutan Rs 200 crore and Bank of Bhutan Rs 200 crore.

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