State-owned companies Power Finance Corporation (PFC) and REC Ltd and have inked a pact with Bhutan based Kholongchhu Hydro Energy Ltd (KHEL) to finance a 600 megawatt (MW) hydroelectric project at Trashiyangtse in Bhutan.

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

PFC and REC Ltd signed a memorandum of understanding (MoU) with KHEL, for the project on 9 March 2021.

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

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REC also said the project is being executed as per an inter-governmental agreement signed between the Government of India (GoI) 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 implementing the 600 MW Kholongchhu hydroelectric project.

PFC and REC, both under the administrative control of the Ministry of Power (MoP), are non banking financial companies in the power sector.

Image: Tala hydroelectric project, Chhukha, Western Bhutan

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