REC, PFC sign pact to finance 600-megawatt hydropower project in Bhutan

State-owned entities REC Ltd and Power Finance Corporation (PFC) have entered into a pact with Bhutan-based Kholongchhu Hydro Energy Ltd (KHEL) to finance a 600-megawatt hydroelectric project at Trashiyangtse in the neighbouring country.

KHEL is a 50:50 joint venture between SJVN India and Druk Green Power Corporation (Bhutan) set up for developing the 600-MW Kholongchhu hydroelectric project in the eastern Bhutan, REC Ltd said in a statement on Wednesday.

REC Ltd along with PFC has signed memorandum of understanding (MoU) on March 9, 2021, with Kholongchhu Hydro Energy Ltd for financing of 600-MW hydroelectric project at Trashiyangtse, Bhutan, the REC statement said.

"The project is proposed to be funded in a debt-equity ratio of 70:30 and as per the MoU, REC would extend rupee term loan of Rs 2,029 crore. The balance debt shall be extended by PFC (Rs 2,029 crore), NPPF, Bhutan (Rs 200 crore) and Bank of Bhutan (Rs 200 crore)," it said.

REC also said the project is being executed as per an inter-governmental agreement signed between the Government of India and the Royal Government of Bhutan (RGoB) in April 2014, to undertake the implementation of four hydroelectric projects in Bhutan through a JV model to be formed by PSUs of the two governments.

KHEL is the first JV being undertaken between the two governments for implementation of the 4x150 MW Kholongchhu hydroelectric project.

REC and PFC, both under the administrative control of the power ministry, are non-banking financial companies in the power sector.