Infrastructure & PPPs in Nepal and Bhutan - Q2 2026 Update

YOG INFRA
3 days ago
6 min read

NEPAL and BHUTAN are advancing clean energy, transport, digital infrastructure, and PPP projects, aimed at strengthening energy security, regional connectivity, and sustainable economic growth. NEPAL is advancing a USD 211 Mn PPP transmission project, a USD 40 Mn ADB-backed digital transformation program, industrial PPP initiatives, and cross-border railway connectivity with India to strengthen infrastructure and economic integration. BHUTAN is leading with over USD 1.7 Bn in hydropower investments, including the 1,125 MW Dorjilung Hydropower Project, while expanding its 5,000+ MW clean energy partnership with Tata Power and investing in urban infrastructure and digital innovation.

Read more about key developments in Infrastructure and PPPs in the four countries in our Q2 2026 insight.

NEPAL

NEPAL SIGNS CONCESSIONAL LOAN DEAL WITH ADB FOR DIGITAL TRANSFORMATION PROJECT

A concessional loan agreement has been signed between the Government of Nepal and the Asian Development Bank (ADB) for the implementation of the Digital Transformation Project.

The agreement for a USD 40 Mn concessional loan was signed between the government of Nepal and the Asian Development Bank (ADB). The project is the first in South Asia to be co-financed under the ADB-World Bank Mutual Reliance Framework. The project will strengthen the government's data hosting and cybersecurity infrastructure to enhance the security and resilience of the government digital system.

It will support key initiatives such as developing an integrated citizen service portal, improving the national social registry, establishing a secure government-wide data exchange platform for safe and efficient information sharing, and digitalizing about 11 high-impact government services.

The project will be implemented by the Ministry of Communications and Information Technology. It aligns with Nepal’s Digital Nepal Framework 2.0, Sixteenth National Plan, e-Governance Blueprint, and ADB’s country partnership strategy for Nepal, 2025–2029, which identifies digital transformation as a core crosscutting priority.

400 KV WEST SETI TRANSMISSION LINE TO BE BUILT IN PPP MODEL

The West Seti 400 kV transmission line project has been taken forward under the Public-Private Partnership (PPP) model to connect the electricity generated from large hydropower projects to be built in western Nepal to the national transmission system. A special purpose vehicle (SPV) named ‘West Seti Transmission Limited’ has been established for the implementation of the project.

The project, estimated to cost around INR 20 Bn (USD 211 Mn), will be constructed with 30% equity and 70% debt investment. The company registration process has been completed with the approval of the investment structure by the board of directors of the National Broadcasting Grid Company Limited (RPGCL).

GOVT TO REOPEN 7 CLOSED INDUSTRIES UNDER PUBLIC–PRIVATE PARTNERSHIP MODEL

The government has announced plans to revive seven closed industries through a Public-Private Partnership (PPP) model. The government aims to bring the shutdown industries back into operation within the next fiscal year.

The initiative is part of broader efforts to boost industrial revival and attract private sector participation in state-led economic restructuring.

INDIA, NEPAL REVIEW PROGRESS OF RAXAUL-KATHMANDU RAIL LINK, CROSS-BORDER RAILWAY PROJECTS

India and Nepal reviewed progress on the proposed Raxaul–Kathmandu railway link and other cross-border rail projects during high-level meetings held in Kathmandu on June 11–12. The discussions provided fresh insights into plans aimed at strengthening travel and trade connectivity between the two neighbouring countries.

The proposed Raxaul–Kathmandu Broad Gauge Railway Link was a key agenda item during the 10th Project Steering Committee (PSC) and 8th Joint Working Group (JWG) meetings. The two countries also reviewed the implementation of the Jaynagar–Bijalpura–Bardibas and Jogbani–Biratnagar railway lines, along with the proposed Janakpur–Ayodhya passenger train service.

The project is expected to provide Kathmandu with a direct rail connection to the Indian Railways network, making travel easier for tourists, businesses, and pilgrims. The government informed the Rajya Sabha that the Final Location Survey (FLS) for the 136 km Raxaul–Kathmandu railway line has been completed and that a Detailed Project Report (DPR) has been prepared.

Once the DPR is processed, the project will require consultations with stakeholders, including the concerned state governments, and approvals from agencies such as NITI Aayog and the Ministry of Finance before it can be sanctioned. The railway project traces its origin to a bilateral understanding between India and Nepal to enhance cross-border connectivity.

BHUTAN

TATA POWER’S HYDROPOWER JV IN BHUTAN SECURES USD 515 MN WORLD BANK FINANCING

The World Bank has signed financing agreements totaling USD 515 Mn with Dorjilung Hydro Power (DHPL), a special purpose vehicle (SPV) jointly owned by Bhutan’s Druk Green Power Corporation (60%) and Tata Power (40%). The estimated total project cost is USD 1.7 Bn. This financing commitment is expected to catalyze an additional USD 900 Mn in private-sector funding. DHPL is developing a 1,125 MW hydropower project on the Kurichhu River in eastern Bhutan.

The project is designed to generate over 4,500 GWh of clean electricity annually. This output will address Bhutan’s seasonal energy gap during the winter months and provide surplus power for export to India during the summer and rainy seasons. Over the 30-year International Development Agency (IDA) credit period, the project is projected to generate approximately USD 4 Bn in revenues for Bhutan through taxes, free power, and equity dividends.

ADB BACKS BHUTAN’S AFFORDABLE HOUSING AND URBAN GROWTH WITH USD 13 MN

The Asian Development Bank (ADB) has approved a USD 13 Mn financing package to help Bhutan strengthen urban infrastructure and expand affordable rental housing for low-income and vulnerable families. The investment will support safer and more resilient communities in Thimphu and Phuentsholing, two of the country's fastest-growing urban centres.

The financing package includes a USD 5 Mn concessional loan, a USD 5 Mn grant from the Asian Development Fund (ADF), and a USD 3 Mn grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), funded by the Government of Japan through ADB.

TATA POWER AND DRUK GREEN POWER CORPORATION EXPANDS COOPERATION WITH NYERA AMARI HYDROPOWER PROJECT

Tata Power and Bhutan's Druk Green Power Corporation (DGPC) have expanded their clean energy partnership with the addition of the 404 MW Nyera Amari I & II Integrated Hydropower Project, taking the total identified hydropower capacity under the collaboration to 5,033 MW from 4,500 MW earlier. Tata Power and DGPC signed an amendment to their Memorandum of Understanding (MOU) to strengthen cooperation in hydropower development in Bhutan as part of the country's clean energy expansion plans.

The expanded partnership now includes hydropower projects such as Khorlochhu (600 MW), Dorjilung (1,125 MW), Gongri Reservoir with Jeri Pumped Storage (2,540 MW combined), Chamkharchhu IV (364 MW), and Nyera Amari I & II (404 MW).

The collaboration is aligned with Bhutan's vision to increase its overall power generation capacity to 25,000 MW by 2040 to strengthen energy security and regional energy integration. The milestone of expanding our joint hydropower portfolio to over 5,000 MW with DGPC marks a significant step in strengthening our clean energy partnership in Bhutan.

The inclusion of the 404 MW Nyera Amari I & II Integrated Hydropower Project, alongside key projects such as Khorlochhu, Dorjilung, Gongri Reservoir with Jeri Pumped Storage, and Chamkharchhu IV, reflects the scale and ambition of this collaboration.

BHUTAN AND INDIA DEEPEN SPACE-TECH TIES THROUGH SATELLITE INTELLIGENCE PARTNERSHIP

Yang Khor Private Limited and SatSure Analytics India Private Limited have signed a Memorandum of Understanding on June 15 to jointly deliver satellite intelligence and geospatial AI across Bhutan, marking a significant step in growing engagement with India’s space technology sector.

The agreement marks a significant step in Bhutan’s growing engagement with India’s space technology ecosystem, coming shortly after an industry delegation visit to Thimphu organised by the Indian National Space Promotion and Authorisation Centre (IN-SPACe), under India’s Department of Space, with facilitation from the Embassy of India and support from Bhutan’s GovTech Agency.

Under the agreement, Yang Khor, one of Bhutan’s leading ICT firms will serve as SatSure’s preferred strategic partner in the country. The company brings more than two decades of experience in Bhutan’s digital transformation, having delivered over 50 national-scale ICT projects across government, financial, and enterprise sectors.

SatSure, meanwhile, contributes expertise in satellite data analytics, geospatial AI, and Earth observation systems spanning the full data value chain. The partnership will focus on six priority sectors aligned with Bhutan’s national development agenda: agriculture and food security; forestry and biodiversity; hydropower and water resources; disaster resilience; climate and ESG reporting; and critical infrastructure monitoring.

BHUTAN BREAKS GROUND ON 25-MW BEGANA HYDROPOWER PROJECT

Bhutan has launched main civil works on the 25-MW Begana Integrated Multipurpose Small Hydropower Project (BIMPSHP), a run-of-river hydropower project that will also support drinking water supply for the capital Thimphu and surrounding areas.

The initiative is being implemented by Druk Hydro Energy Limited, a unit of Bhutan's state-owned power utility Druk Green Power Corporation (DGPC), with financing support from the OPEC Fund for International Development and the Kuwait Fund for Arab Economic Development (KFAED).

The project on the Thimchhu River is expected to generate around 104 million kWh annually. Besides renewable electricity production, the facility is intended to improve water supply reliability, create local jobs and support infrastructure development. The project demonstrates Bhutan’s growing ability to independently develop and implement small and medium-sized hydropower projects using domestic expertise.

List of key transactions - Nepal and Bhutan Q2-2026

Source: YOG INFRA analysis

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