Infrastructure & PPPs in Bangladesh, Nepal, Sri Lanka and Bhutan - Q3 2025 Update

YOG INFRA
1 day ago
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SOUTH ASIAN countries - Bangladesh, Nepal, Bhutan and Sri Lanka are accelerating renewable and infrastructure development through strong public–private partnerships and regional cooperation. Bangladesh is scaling solar capacity and international collaboration to meet its 2030 renewable goals, emphasizing energy diversification. Nepal is advancing major hydropower, solar, and transmission projects, signaling a structural shift toward PPP-driven energy expansion and cross-border trade. Bhutan is moving from state-led to multilateral and private participation, diversifying beyond hydropower through large solar, airport, and railway projects tied to its “10X Journey.” Sri Lanka continues its clean energy transition with solar and battery storage initiatives supporting net-zero ambitions. Collectively, these trends reflect a regional push toward sustainability, energy security, and resilient infrastructure underpinned by private investment and international financing.

Read more about key developments in Infrastructure and PPPs in the four countries in our Q3 2025 insight.

BANGLADESH

BANGLADESH RENEWABLE ENERGY TARGET: ESSENTIAL 2030 POWER PLAN

Bangladesh aims to generate 20% of its electricity from renewable sources by 2030, with solar energy as the key driver. The country has already achieved a renewable energy capacity of 2,760.58 MW, including 1,734.69 MW from solar, 230.41 MW from hydropower, 2.9 MW from wind, and 792.58 MW from other sources. In total, renewables have produced 9,362.13 GWh of electricity, led by solar at 7,013.54 GWh, followed by hydropower (1,716.18 GWh), other renewables (632 GWh), and wind (0.41 GWh). To expand capacity further, 30 renewable energy projects with 1,448.57 MW are currently under development.

Key challenges include land scarcity and high storage costs, for which solutions like floating solar farms and rooftop systems are being pursued. Bangladesh is also exploring wind potential in coastal areas and biomass and biogas projects to diversify its energy mix. The Membership in the International Solar Alliance (ISA) supports access to funding, technology, and international collaboration.

Bangladesh targets 100% renewable energy by 2050, aligning with its strategy for a low-carbon economy and reduced reliance on fossil fuels. By diversifying energy sources and accelerating infrastructure investments, the country is positioning itself as a regional leader in sustainable energy while strengthening resilience against climate risks.

AUSTRALIA AND BANGLADESH SIGN MOU TO STRENGTHEN RENEWABLE ENERGY COOPERATION

The Australian Trade and Investment Commission (Austrade) facilitated the signing of a Memorandum of Understanding (MoU) between the Smart Energy Council (Australia) and the Bangladesh Sustainable and Renewable Energy Association (BSREA) to advance Bangladesh’s renewable energy transition.

The agreement will focus on solar training and installer certification aligned with international standards, technical guidance for safety and certification systems, circular economy solutions for end-of-life solar panels and battery systems, deployment of renewable energy projects with enhanced stakeholder engagement, and bilateral knowledge exchange and regional collaboration across the Asia-Pacific.

The collaboration reflects growing momentum in Australia-Bangladesh relations, with both countries reaffirming their commitment to building a sustainable, secure, and energy-resilient future through renewable energy cooperation.

ADB, MSEL SIGN DEAL TO ESTABLISH 20-MW SOLAR POWER PLANT IN BANGLADESH

The Asian Development Bank (ADB) has signed a USD 24.3 Mn financing package with Muktagacha Solartech Energy Limited (MSEL) to establish a 20-megawatt (MW) grid-connected solar photovoltaic power plant in Mymensingh, Bangladesh. The financing package comprises a USD 15.5 Mn loan from ADB and an USD 8.8 Mn loan from Leading Asia’s Private Infrastructure Fund 2 (LEAP 2), administered by ADB.

The solar power plant will generate 37.9 gigawatt-hours of electricity annually and avoid 18,344 tons of carbon dioxide emissions each year. This project is one of the first private sector utility-scale solar facilities in Bangladesh to receive support from international financiers, promoting private sector involvement in renewable energy development. Currently, renewable energy makes up only 4.5% of the country’s total power capacity.

MSEL is owned by Bangladesh-based Joules Power Limited (JPL), part of Expo Group, which operates across renewable energy, logistics, freight forwarding, and infrastructure. LEAP 2, with a USD 1.5 Bn commitment from Japan International Cooperation Agency (JICA), supports sustainable private sector infrastructure projects across ADB’s developing member countries.

ROOFTOP SOLAR TARGET IN BANGLADESH FACES TIGHT TIMELINE, CAPACITY HURDLES

Amid Bangladesh’s ongoing energy crisis, the government has announced a new programme to install 3,000 megawatts (MW) of rooftop solar capacity by December 2025. However, this target appears ambitious, as only 245MW of rooftop solar was installed between June 2008 and June 2025, requiring more than a 12-fold increase in less than six months. Limited availability of qualified Engineering, Procurement and Construction (EPC) companies also raises questions about implementation capacity.

Under the programme, government offices will roll out rooftop solar through the CAPEX model supported by public funds, while hospitals and educational institutions will operate under the OPEX model with no upfront cost. The CAPEX model allows faster rollout and higher savings but faces risks from poor coordination, lack of maintenance, and rushed developer selection. In contrast, the OPEX model ensures better quality but offers lower savings, financing challenges, and risks linked to rural load-shedding, which could reduce solar generation and discourage investment.

The programme also faces risks from soiling, which can reduce annual energy yield. To mitigate this, the government is advised to direct public offices to allocate savings for maintenance funds under the CAPEX model and establish long-term service contracts. Utilities must also address load-shedding in rural areas. Bangladesh can draw lessons from neighbouring countries: Pakistan expanded rooftop solar due to energy shortages and high tariffs, Sri Lanka overcame financing barriers with multilateral support, and India reached over 18 gigawatts of rooftop solar by May 2025 through consistent policy and regulatory support. Capacity development of stakeholders and independent monitoring will be crucial for successful implementation.

NEPAL

NEPAL SOLAR I-REC: 2023’S POWERFUL BREAKTHROUGH PROJECT

Nepal has launched its first solar project eligible for International Renewable Energy Certificates (I-RECs), a 16.5 MW facility in the Nawalparasi district. This initiative signifies a major step forward for Nepal’s renewable energy sector. This project is a critical milestone for Nepal, a country traditionally reliant on hydropower. The I-REC accreditation enables the project to issue 23,000 I-RECs annually, effectively integrating it into global renewable energy markets.

The several significant solar projects are in development, including a 10 MW plant in Butwal, an 8.5 MW plant in Simara, and a 25 MW plant in Jhapa. These initiatives, alongside the government’s ambitious target of 10,000 MW of solar capacity by 2035 are poised to significantly increase the nation’s solar energy capacity. The Butwal plant will serve the Lumbini Province, the Simara plant the Madhesh Province, and the Jhapa plant Province number 1. These projects aim to reduce Nepal’s reliance on hydropower, a source susceptible to seasonal variations.

The Nepali government is actively promoting renewable energy through various initiatives. The 2016 Renewable Energy Subsidy Policy offers financial incentives for small-scale solar and wind projects, stimulating private sector involvement. A USD 20 Mn World Bank grant further supports this expansion. The government has set a target of 25% renewable energy in the national energy mix by 2030. A dedicated Renewable Energy Fund is planned to support renewable energy projects, mitigating investment risks and attracting foreign investment through international partnerships.

US TO RESUME GRANTS TO NEPAL FOR TWO KEY INFRASTRUCTURE PROJECTS

The U.S. Government’s Millennium Challenge Corporation (MCC) and the Government of Nepal signed a USD 500 Mn compact to spur economic growth and reduce poverty in Nepal. The United States will resume its funding for two major infrastructure projects in Nepal that were earlier put on hold after USA suspended all foreign development assistance. The 2 Projects are:

THE ELECTRICITY TRANSMISSION PROJECT: It is designed to transform Nepal’s power sector by expanding and strengthening the high voltage electricity transmission network to support new investments in generation. The project includes the construction of approximately 300 km of high voltage power lines, equivalent to one-third the length of Nepal; the addition of a second cross-border transmission line to facilitate greater electricity trade with India; and activities to improve sector governance to increase private investment.
THE ROAD MAINTENANCE PROJECT: It is designed to improve the maintenance regime in Nepal. It will include a matching fund to maintain up to 300 km of roads and incentivize the Government of Nepal to allocate more resources for periodic maintenance, particularly for key roads that are vital to the movement of goods and people in the country. This project will complement existing efforts by others to build new roads.

New procurement and business opportunities associated with the Nepal Compact will be announced in the coming months The Millennium Challenge Corporation is an independent U.S. Government agency working to reduce global poverty through economic growth.

GMR PROCEEDS WITH UPPER KARNALI HYDROPOWER WORKS

Nearly two decades after it was first proposed, Indian multinational conglomerate GMR has finally started the process for construction of the 900 MW Upper Karnali Hydropower Project. The long-delayed project, first envisioned in 2006, took a big step forward on July 8 when GMR Upper Karnali Hydropower Ltd invited bids for construction works.

The project has been divided into three major packages:

Construction of a 2,431-metre-long access road tunnel.
Design and construction of a 150-metre RCC/steel bridge over the Karnali River near the dam site.
Access roads at the headworks site, spanning roughly 7 kilometres.
The total estimated cost of the project is NPR 146 Bn (USD 1.03 Bn). GMR Upper Karnali Hydropower Limited, Nepal; SJVN Limited, a public sector enterprise of India; and the Indian Renewable Energy Development Agency Limited (IREDA) signed a memorandum of understanding to jointly develop the project through a new joint venture company based in Nepal.

Under the proposed shareholding structure, SJVN and GMR will each hold a 34% stake, IREDA will have 5%, and the Nepal Electricity Authority will hold the remaining 27%. The Investment Board Nepal has approved this restructuring of shares. Of the total energy generated in Upper Karnali, 108 MW is allocated for Nepal’s domestic consumption. Meanwhile, 500 MW was to be exported to Bangladesh under a long-term supply agreement denominated in US dollars. The remaining 292 MW was planned for sale in the Indian market.

FIVE ORGANISATIONS AGREE FOR CONSTRUCTION OF POWER PROJECTS, TRANSMISSION LINE IN WEST SETI CORRIDOR

A multilateral MoU has been signed among Hydroelectricity Investment and Development Company Limited (HIDCL), Rastriya Prasharan Grid Company Limited (RPGCL), Chainpur Seti Jalbidhyut Company Limited (CSJCL), Chilime Seti Hydropower Company Limited (CSHC), and Samriddhi Engineering Limited (SEL) for hydropower development and the construction of the Bajhang-Nilegada-Dodhara 400 kV cross-border transmission line under the West Seti Corridor. The agreement also covers three connected projects:

Chainpur Seti (210 MW)
Seti River-3 (87 MW)
Bajhang Upper Seti (216 MW)

Under the Memorandum of understanding, HIDCL will lead financial management, while RPGCL will construct and operate the transmission line through a Special Purpose Vehicle (SPV). Most of the projects have already secured approvals including construction permits, environmental impact assessments (EIA), power purchase agreements (PPA), grid connections, and investment clearances. Studies, designs, and land acquisition for the transmission line have also been completed.

The collaboration is expected to accelerate hydropower and transmission infrastructure in western Nepal, reduce electricity wastage, strengthen the national grid, and support long-term Nepal-India power trade.

NEA PARTNERING WITH PRIVATE SECTOR TO BUILD FOUR TRANSMISSION LINES

The Nepal Electricity Authority (NEA) has formally invited the private sector to submit proposals for constructing four major transmission lines. This initiative is part of the government’s broader strategy to open up the power sector to private investment and meet growing energy demands through Public-Private Partnerships (PPP). The NEA is seeking Expressions of Interest (EoI) from private companies to design, build, and operate high-voltage transmission corridors. These projects will follow the Build, Own, Operate, and Transfer (BOOT) model, where private developers will eventually transfer ownership to the government after a defined operational period. The selection process will be based on annual required revenue-based competitive bidding.

The planned projects include:

80 km stretch of 400 kV New Khimti–Dhalkebar transmission line, estimated at USD 80 Mn.
94 km stretch from Arun Hub in Sitalpati to Inaruwa, also estimated at USD 80 Mn.
118 km stretch of 400 kV Tingla–Dudhkoshi–Dhalkebar line, with an estimated cost of USD 142 Mn.
30 km stretch of 220 kV Lapsifedi–Teenpiple line, projected to cost USD 18 Mn.

This marks a continuation of the government’s 2024 policy reform to end NEA’s monopoly in power infrastructure development.

HETAUDA-KATHMANDU ROPEWAY REVIVAL IN NEPAL

Nepal’s mountainous terrain and monsoon climate create severe transportation challenges, with landslides and floods frequently disrupting major highways, isolating communities, and halting trade. In 2024, heavy rainfall blocked 37 highways, damaged 25 bridges, and displaced thousands, with over 224 fatalities. Roads such as the Prithvi, Araniko, and Pasang Lhamu Highways remain highly vulnerable during monsoons, causing significant economic and social disruptions. Given these vulnerabilities, reviving the 42-km Hetauda-Kathmandu Ropeway, which previously provided reliable cargo transport at half the cost of road transport, presents a proven alternative for resilient connectivity.

Ropeways offer resilience, cost savings, and environmental benefits compared to roads. Unlike highways, ropeways are less affected by floods and landslides, occupy minimal land, and align with Nepal’s hydropower-driven clean energy goals. Studies show construction costs of ropeways are up to six times lower than roads in hilly terrain, while operating costs were historically cheaper—transporting goods at Rs 346.80 per ton versus Rs 480 by trucks. Gravity goods ropeways, costing about Rs 2 Mn per km, can reduce transport costs by 70%. Beyond cost efficiency, ropeways minimize deforestation, soil erosion, and landslide risks linked to unplanned road expansion, while also boosting rural economies by connecting remote markets and reducing travel time.

Reviving the Hetauda-Kathmandu Ropeway requires new construction, modern technical upgrades, and investment. Public-private partnerships, policy incentives, and international collaboration can help overcome financial and technical challenges. Integrating the ropeway with inland container depots and trade corridors would strengthen supply chains, reduce urban congestion, and ensure year-round connectivity. As a sustainable and resilient mode of transport, ropeways can reduce monsoon-related losses, enhance trade efficiency, and preserve fragile ecosystems. Reviving the system would mark a strategic shift toward climate-resilient, low-cost, and environmentally sustainable transport in Nepal.

216 MW UPPER SETI CONCLUDES ITS FINANCIAL CLOSURE

The 216 MW Upper Seti Hydropower Project (USHP) has concluded its financial closure under the consortium of Kumari Bank Limited. The hydropower project is planned to be constructed in 4 and 5 number wards of Saipal Rural Municipality in Bhajhang district of Sudurpashchim Province. The project is set to be completed within five years from the date of construction.

NMB Bank Limited is set to co-lead the financial management for the project. The financial consortium includes Machhapuchhre Bank, Hydroelectricity Investment and Development Company, Laxmi Sunrise Bank, Nepal Investment Mega Bank, Prabhu Bank, Nepal SBI Bank, NIC Asia Bank, Agricultural Development Bank, Lumbini Development Bank, Shangrila Development Bank, Kamana Sewa Development Bank, and ICFC Finance.

Commercial production of the project has been targeted to commence by July 15, 2031. The USHP is projected to generate 1,229.6 GWh of electricity annually. The project is estimated to cost around USD 315 Mn, while it will be financed through a 70% debt and 30% equity ratio.

341 MW BUDHIGANDAKI HYDROPOWER PROJECT SECURES FINANCIAL CLOSURE

Ten banks and financial institutions have agreed to invest NPR 70 Bn (USD 500 Mn) in the construction of this semi-reservoir-type project. Nepal Investment Mega Bank is leading the consortium, with Nabil Bank, Laxmi Sunrise Bank, and Global IME Bank as co-lead banks. Six other banks and the Hydroelectricity Investment and Development Company Limited (HIDCL) are also part of the investment group.

The total estimated cost of the project is NPR 70 Bn (USD 500 Mn), with 75% to be financed through loans and 25% through equity. Sahas Urja will lead the equity investment with a 51% share (NPR 8.925 NPR), and Times Energy Pvt Ltd is the project promoter.

The project, a peaking run-of-the-river (PRoR) type, will be built in Chumnubri and Dharche Rural Municipalities of Gorkha. It will feature a reservoir allowing five hours of daily power generation. Electricity will be generated through six underground Pelton turbines, each with a capacity of 57 MW.

The company targets to begin commercial production by December 30, 2030, with an expected annual generation of 1,867 GWh. The electricity will be connected to the under-construction Ratmate substation through a 45-km 220 kV transmission line supported by the MCC. This project surpasses the 285 MW Tamor project which is currently the largest private sector hydropower project, setting a new milestone in Nepal's energy sector.

SRI LANKA

SRI LANKA: HIRIPITIYA SOLAR PLANT EXPECTED TO GENERATE 10 GW OF CLEAN ENERGY ANNUALLY

A new 5 MW solar power plant has been inaugurated in Hiripitiya, developed by a local energy firm under Pan Asian Power Pvt. Ltd. Spanning 20 acres, the ground-mounted installation is expected to generate 10GWh of clean energy annually and supply directly to the national grid.

The project is estimated to save around USD 3.3 Mn in foreign exchange by reducing reliance on diesel imports. It also strengthens Sri Lanka’s renewable capacity while lowering fuel costs. The government has emphasized maintaining state ownership in the energy sector while encouraging private sector participation in renewables to meet future energy needs sustainably.

SRI LANKA AND ISA INK SOLAR DEPLOYMENT ROADMAP

Sri Lanka has signed a Country Partnership Framework with the International Solar Alliance (ISA) to accelerate solar deployment, financing, and institutional capacity. The agreement outlines a strategic roadmap to support the country’s renewable energy transition.

Sri Lanka targets 70% renewable energy in electricity generation by 2030 and aims to achieve carbon neutrality by 2050. The initiative is expected to help the country leverage economies of scale, reduce transaction costs through competitive bidding, and enable knowledge exchange, particularly for Small Island Developing States. The partnership focuses on designing tailored interventions aligned with national priorities to build a resilient, inclusive, and solar-powered future for the Asia-Pacific region.

SRI LANKA UNVEILS FLOATING SOLAR PROJECTS TO REACH NET-ZERO CARBON BY 2050

Sri Lanka’s Cabinet of Ministers has approved a call for proposals from companies to provide consultancy services for launching floating solar power projects. These services will include pre-feasibility studies, feasibility studies, and environmental impact assessments to ensure project viability and sustainability.

The country aims to generate 70% of its electricity from renewable sources by 2030 and achieve zero carbon emissions in electricity generation by 2050. Floating solar power is considered a key component of these long-term climate and energy goals.

Under the Renewable Energy Resources Development Plan 2026–2030, reservoirs with an estimated potential of 3,000 MW have been identified for floating solar projects, based on a median surface utilization of 10%. The Cabinet’s resolution initiates the procurement process to engage recognized companies to support the technical and environmental groundwork, marking a major step in Sri Lanka’s renewable energy expansion.

CONSTRUCTION OF 100 MW SOLAR POWER PLANT AT SIYAMBALANDUWA BEGINS

The construction of a 100 MW solar power facility in Siyambalanduwa started in September 2025 with competition projected by Q1-2027. It is being built with BOO model (Build-Own-Operate). It is being developed by a joint venture called Rividhanavi Pvt Ltd, which includes WindForce PLC, Lakdhanavi Ltd, and Blue Circle Pte Ltd. It will be developed on 219.723 hectares of unused land allocated to the Sri Lanka Sustainable Energy Authority (SLSEA).

The facility is expected to save approximately LKR 56.5 Bn (USD 173 Mn) in fuel imports over its 20-year lifespan and prevent 147,542 tons of CO2 emissions, supporting Sri Lanka’s Nationally Determined Contributions under international environmental treaties.

This project represents a key step in the country’s renewable energy transition, with solar capacity reaching 966 MW by the end of 2023. Its approval signals the government’s commitment to expanding clean energy infrastructure and achieving long-term sustainability goals.

SRI LANKA SEEKS BIDDERS FOR 160MW/640MWH RENEWABLES-SHIFTING BESS PROJECTS

Ceylon Electricity Board (CEB), Sri Lanka’s state-owned utility covering about 75% of the country’s electricity supply, has issued a request for proposals (RFP) on 30 July for large-scale battery energy storage system (BESS) projects. The projects will be developed under 15-year build-own-operate (BOO) agreements through a competitive bidding process.

The scheme comprises 16 standalone projects of 10MW/40MWh each (4-hour duration), to be built on 0.8-acre plots and connected to the grid at the 33kV level. Developers will be responsible for design, supply, construction, testing, commissioning, operation and maintenance. Each project will include batteries, inverters, transformers, energy management systems, plant controllers, SCADA facilities, transmission connections, and required auxiliary infrastructure.

The BESS installations are critical to ensuring grid stability as the share of intermittent renewable energy sources such as solar and wind increases. While no specific technology was mandated, proposals must use new, unused equipment with a proven track record in countries with similar infrastructure to Sri Lanka.

BHUTAN

BHUTAN BEGINS CONSTRUCTION OF DORJILUNG HYDROPOWER PROJECT

Bhutan has officially initiated construction of the 1,125 MW Dorjilung Hydropower Project, located on the Kurichhu River in Mongar and Lhuentse districts. The project is a joint venture between Bhutan’s state utility and an Indian partner, marking a strategic shift from purely government-led projects to a partnership model involving private capital and multilateral finance, with the World Bank as lead financier.

Initial works such as access roads and bridges have begun with local contractors, while major construction is expected to start in 2026. The total cost is estimated at around USD 1.7 Bn, with the Indian partner holding a 40% stake.

This project is part of a broader initiative to jointly develop 5,000 MW of renewable capacity in Bhutan, including solar and other large hydropower schemes, to strengthen energy security and support climate goals. Dorjilung is expected to boost Bhutan’s economy and reinforce its hydropower-led development strategy.

BHUTAN’S BIGGEST SOLAR PROJECT YET: A GIANT LEAP TOWARD ENERGY SECURITY

Bhutan inaugurated its first-ever utility-scale solar photovoltaic (PV) power plant in July in Yongtru, Wangdue Phodrang. Spread across 63 acres and fitted with 26,500 panels, the plant has a total capacity of 22.38 MWp, developed in two phases. Phase I (17.38 MWp) is operational and expected to generate 25 Mn kWh annually, while Phase II (5 MWp) with 8,700 panels is scheduled for commissioning in September. The project aims to meet winter energy demand when hydropower output drops.

The project is funded by a USD 10 Mn grant and USD 8.26 Mn concessional loan from the Asian Development Bank (ADB), along with USD 0.99 Mn from the government. Originally designed for 17.38 MWp, it was expanded to 22.38 MWp after surplus funds became available. Bhutan, which imported nearly 999 Mn units of electricity in 2024 at a cost of BTN 3.4 Bn (USD 38.8 Mn), expects the plant to reduce imports by around 25 Mn units annually. This aligns with its targets of 500 MW solar by 2025 and 1,000 MW by 2030.

The project strengthens Bhutan’s energy security while supporting community benefits, including road improvements, water supply, plantations, and a planned community hall. It is part of a broader renewable energy push with large-scale projects such as the upcoming 120 MWp Jamjee Solar PV Project in Thimphu and over 100 MW projects in Dagana and Bumthang. Together, these initiatives mark Bhutan’s transition from hydropower reliance to a diversified, climate-resilient energy mix.

ADANI POWER & DRUK GREEN POWER TO JOINTLY DEVELOP RS 6,000-CRORE WANGCHHU HYDROELECTRIC PROJECT IN BHUTAN

Adani Power and Bhutan's state-owned utility Druk Green Power Corporation (DGPC) have signed an agreement to set up a 570 MW hydro project entailing worth INR 6,000 Cr. (USD 679.5 Mn), in Bhutan. The deal will see Adani Power and Druk Green build the run-of-river Wangchhu hydroelectric project on a BOOT (Build, Own, Operate, Transfer) model. A power purchase agreement (PPA) and a concession agreement were also signed.

The Wangchhu hydroelectric project will critically meet Bhutan’s peak winter demand, when hydro power generation is low. During the summer months, it would export power to India. The Wangchhu is the first hydroelectric project to be taken up under an MoU that was signed in May 2025 between the Adani Group and DGPC for jointly developing 5,000 MW of hydropower in Bhutan.

BHUTAN BEGINS GELEPHU INTERNATIONAL AIRPORT PROJECT

Bhutan has begun construction on its second international airport in Gelephu, marking a major milestone in the country’s development. Set to open by 2029, the airport will enhance connectivity, support tourism, and anchor the visionary Gelephu Mindfulness City.

Set to be completed by 2029, Gelephu International Airport is the first major infrastructure component under the Gelephu Mindfulness City initiative. Envisioned as a centre of mindful innovation and holistic living, the Mindfulness City project reflects Bhutan’s unique approach to development—one that places human wellbeing and spiritual harmony at its core.

The airport will cover four square kilometres across the Paitha River and feature a 3,000-metre CAT I Code 4E runway. Initially designed to accommodate Airbus A321 and Boeing 737 aircraft, it will eventually support wide-body aircraft as well. With capacity for 1.3 million passengers annually, the airport can be expanded to serve over 5.5 million passengers in the future.

PUNATSANGCHHU-II HYDROPOWER PROJECT FULLY COMMISSIONED

Punatsangchhu-II is a run-of-the-river 1020 MW hydroelectric power plant located on the Punatsangchhu River in Bhutan’s Wangdue Phodrang district. Fully commissioned in August 2025, it adds nearly 40% to Bhutan’s total power capacity, making it one of the biggest milestones in India-Bhutan energy cooperation. This clean energy project boosts Bhutan’s economy, strengthens India’s energy security, and showcases sustainable hydropower technology.

The entire project was paid for by the Government of India. It was a mix of a gift and a loan: 30% was a grant (money that doesn’t have to be paid back) and 70% was a loan with a 10% annual interest rate. The loan will be paid back over 15 years in 30 equal payments, starting a year after the project began working.

INDIA-BHUTAN CROSS BORDER RAILWAY PROJECT ANNOUNCED

India and Bhutan have announced a landmark initiative to establish railway connectivity between the two countries, making the first cross-border railway project for Bhutan.

The Railway line will link Gelupu, planned as a mindfulness hub, with Samtse, an industrial city. Both the lines will connect to the Indian Railways network at Kokrajhar and Banarhat. The Projects consists of 2 Railway lines:

The Kokrajhar-Gelephu line - It is valued at ₹3,456 Cr (USD 389.4 Mn), will feature six stations, two major bridges, 29 additional major bridges, 65 minor bridges, two goodsheds, one flyover, and 39 underpasses. The line will cover 66.66 km on the Indian side and 2.39 km within Bhutan, with an anticipated construction period of four years.
The Banarhat-Samtse line - The 20-km Banarhat-Samtse line, costing ₹577 Cr (USD 65 Mn), will include two stations, one major bridge, 24 minor bridges, one overpass, and 37 underpasses. This project will span 17.42 km in India and 2.13 km in Bhutan, with completion expected within three years.

Both railways will be fully electrified and designed to accommodate modern trains, including semi-high-speed Vande Bharat trains, along with advanced signalling systems. The project is being promoted under India’s ‘Make in India’ initiative. The total investment for the railway lines will be provided by the Indian government, with all technology and train coaches to be made in India.

DHI LAUNCHES 10X JOURNEY

Druk Holding and Investments Limited (DHI) launched its "10X Journey" in August 2025, aiming to achieve tenfold growth over the next decade. This strategic roadmap is designed to transform Bhutan into a high-income, digitally integrated, and globally relevant nation by 2035. The primary objective is to increase Bhutan’s national assets and economic contributions tenfold by 2035. This ambitious goal is aligned with Bhutan’s 21st Century Economic Roadmap, which targets a tenfold increase in GDP by 2050.

The 10X Journey is anchored on three core pillars:

Portfolio Management: Enhancing governance and efficiency across DHI’s 25+ portfolio companies.
Investment: Channeling over USD 40 billion into future-focused sectors.
Innovation: Establishing a knowledge-based ecosystem to drive research and development.

These pillars are supported by enablers in financing, technology, and human capital.

DHI have five Strategic Focus Areas on building resilient growth engines across the country:

Energy and Resources
DHI will build a resilient energy ecosystem to support Bhutan’s growth:
• Hydropower & Renewables: Expand hydro and solar capacity and explore emerging technologies like geothermal, hydrogen, and small modular reactors for a diversified energy portfolio.
• Energy Infrastructure: Upgrade smart grids, storage systems, and market mechanisms to ensure reliable supply and support industrial growth.
• Triangulation Strategy: Partner with global investors, industrial players, and government stakeholders to enable PPAs and attract energy-intensive industries.
• Forests & Timber: Develop engineered timber production, circular forestry, and materials R&D for domestic use and exports.
• Water Resources: Invest in water purification, smart monitoring, efficient usage, and water-based industries to maximize Bhutan’s water potential.
MANUFACTURING AND SERVICES
DHI will focus on a low volume, high value manufacturing strategy, which includes building capacity in design, engineering, and manufacturing in sectors such as efficient motors for electric vehicles (EVs), components for humanoid robots, and space industry technologies aligned with GovTech’s mission. DHI will explore investment partnerships in:
• Premium medical and wellness services.
• Education-tech and transnational education campuses.
• Logistics and aviation services including catering, security, and airport management services
INFRASTRUCTURE
It has been subdivided into 3 categories:
• PHYSICAL INFRA: DHI will strategically prioritize investments in infrastructure that foster technological advancements, business opportunities, and enhance Bhutan’s connectivity both globally and domestically
• DIGITAL INFRA: DHI will expand Bhutan’s connectivity backbone through f iber expansion, last-mile Fiber To The Home (FTTH) rollout, and satellite-ground link integration in close coordination with GovTech Agency.
• FINANCIAL INFRA: DHI will expand the foundation of a Digital Public Infrastructure (DPI), through the expansion of the decentralized NDI Systems built on Self Sovereign Identity principles in collaboration with GovTech Agency. Strategy would be to expand the use cases of the NDI for Government Services, Utilities, Corporate Sector and all public service systems through single sign on, Digital/Cryptographic signatures platforms, e-KYC and many more.
MINES AND MINERALS
DHI will work closely with MoENR to unlock Bhutan’s untapped mineral potential in a way that is sustainable and will also actively pursue commercialization. Using modern geological mapping, AI, drone technology, and international best practices, the strategy will focus on exploring and adding value to important minerals such as magnesium, graphite, tungsten, lithium, copper, molybdenum, and other rare earth elements that are important to Bhutan.
GLOBAL SECURITIES
DHI will gradually expand its exposure to global capital markets to diversify income streams and enhance investment capabilities. This includes managed portfolios of equities, fixed income, and thematic funds, built through strategic partnerships. DHI will maintain a balanced portfolio of digital assets considering it as a store of value as well as opportunities in tokenomics, crypto currencies, central bank digital currency (CBDC) and the evolving landscape of Blockchain and Web3 technologies and will form a frontier in DHI’s portfolio.

List of key transactions - Bangladesh ,Nepal, Sri Lanka and Bhutan Q3 2025

Source: YOG INFRA analysis

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