In a significant move to bolster its renewable energy portfolio, Tata Power has unveiled plans to invest ₹1,572 crore to acquire a 40% equity stake in a special purpose vehicle that will develop the massive 1,125 MW Dorjilung hydropower project in Bhutan.
Strategic Investment in Clean Energy
The acquisition, which will be executed through a shareholders' agreement between Tata Power and Bhutan's Druk Green Power Corporation Ltd (DGPC), represents a crucial step in the company's green energy expansion strategy. According to regulatory filings, the investment will be carried out in one or more tranches, with the first tranche expected to be completed within six months.
The total project cost for the Dorjilung hydro project is estimated at ₹13,100 crore, making it one of the significant hydropower developments in the region. The special purpose vehicle that will oversee the project is yet to be formally incorporated.
Transaction Structure and Timeline
While the acquisition will not initially qualify as a related-party transaction, Tata Power clarified that once the deal is finalized, the SPV will become its associate company and consequently a related party. This strategic investment underscores Tata Power's commitment to expanding its footprint in the hydropower segment and strengthening its clean energy capabilities.
The ₹1,572 crore investment for the 40% equity stake will be payable in cash, potentially distributed across multiple tranches based on project requirements and milestones. This structured approach allows for phased capital deployment while maintaining financial discipline.
Boosting Renewable Energy Portfolio
Once operational, the Dorjilung hydropower project is expected to significantly enhance Tata Power's clean energy portfolio and reinforce its position in the renewable energy sector. The project aligns with India's broader objectives of increasing renewable energy capacity and reducing carbon emissions.
This investment marks Tata Power's continued focus on sustainable energy solutions and represents a strategic partnership between Indian corporate expertise and Bhutan's significant hydropower potential. The collaboration with Druk Green Power Corporation Ltd leverages Bhutan's reputation as a hydropower powerhouse in the region.
The development comes at a time when India is aggressively pursuing its renewable energy targets, and investments in cross-border clean energy projects are gaining momentum. The Dorjilung project is poised to contribute substantially to the regional power grid while supporting sustainable development goals.
