Kholongchhu Hydroelectric Project

The Kholongchhu Hydroelectric Project is a 600-megawatt run-of-river hydropower facility under construction on the Kholongchhu River in Trashiyangtse District, in the easternmost reaches of Bhutan. The project is historically significant as the first energy development between India and Bhutan to be structured as a commercial joint venture rather than a bilateral government-to-government grant-and-loan arrangement—the model that has governed every previous major Indo-Bhutanese hydropower project since the Chhukha plant in 1986. This structural departure reflects a maturation of the bilateral relationship and an effort by both governments to attract private sector discipline and financing to Bhutan's hydropower expansion.

Project Structure and Joint Venture

The project is being developed by Kholongchhu Hydro Energy Limited (KHEL), a joint venture between Druk Green Power Corporation (DGPC)—Bhutan's state-owned hydropower generator—and Satluj Jal Vidyut Nigam Limited (SJVN), an Indian public sector undertaking operating under the Ministry of Power, Government of India. The concession agreement for the project was signed in June 2020 between the Royal Government of Bhutan and KHEL, providing KHEL with the right to construct, own, and operate the facility for a defined concession period before transferring assets to the Bhutanese state.

Financing follows a 70:30 debt-to-equity ratio, with the Government of India providing DGPC's equity share as a grant, maintaining the tradition of Indian support for Bhutanese hydropower while introducing a joint venture governance structure. SJVN brings engineering expertise from its operations across northern India, Nepal, and other Himalayan projects. The joint venture model is expected to bring greater commercial discipline to project execution and to create a replicable template for future bilateral hydropower ventures.

Technical Specifications

• Installed capacity: 600 MW (four generating units)
• Dam type: 95-metre concrete gravity dam, approximately 165 metres in length
• Reservoir: 1.4 kilometres in length, gross storage of 2.9 million cubic metres
• Powerhouse: Underground cavern
• Annual generation: Estimated 2.5 billion units (kWh)
• River: Kholongchhu, a tributary draining eastern Bhutan's high ranges

As a run-of-river project, Kholongchhu impounds only a modest reservoir, substantially reducing environmental and resettlement impacts compared with large storage dams. The underground powerhouse minimises surface disruption in the ecologically sensitive eastern landscape. Eastern Bhutan's rivers remain among the least exploited hydropower resources in the country, partly because of their remoteness from the electricity transmission grid and the Indian border, which adds to the cost and complexity of development.

Construction Progress and Timeline

The project was expected to begin construction in earnest in 2021 following the signing of the concession agreement in 2020, though mobilisation was delayed by the COVID-19 pandemic and associated supply chain and logistics disruptions. SJVN has indicated a target completion date in the second half of 2025 or 2026, though hydropower projects in the Himalayas routinely experience schedule overruns due to difficult geological conditions and the effects of the annual monsoon on construction activity. The project is one of several in the pipeline that Bhutan is advancing in pursuit of its target of 10,000 MW of installed hydropower capacity.

Significance and Context

When commissioned, Kholongchhu will add substantially to Bhutan's hydropower export capacity, with the bulk of its generation expected to be sold to India under power purchase arrangements. The project will support economic activity in one of Bhutan's most remote and least economically active regions, creating construction and operational employment in Trashiyangtse and generating royalty revenues for the dzongkhag administration. It also marks a new chapter in how Bhutan and India structure their energy partnership—one in which both sides share equity stakes and commercial risk rather than the purely concessional financing arrangements of earlier decades.

References

1. "Signing of Concession Agreement for 600 MW Kholongchhu Hydroelectric Project." Ministry of External Affairs, India, June 2020.
2. "Kholongchhu hydroelectric project, Kholongchhu River, Bhutan." NS Energy Business.
3. "Khorlochhu Hydro Power Limited." Official Website.
4. "Tata Power to partner with DGPC." Tata Power.
5. "Bhutan-India Hydropower Relations." Royal Bhutanese Embassy, New Delhi.