Tata picks up 26% equity in Dagachu hydro power

Thimphu: Tata Power, a subsidiary of the Tata Company, is now a partner in the Nu 8 billion 114 MW Dagachu Project.

Tata, in January 2008, was given an equity or share ownership of 26 per cent in the Dagachu hydro power corporation, which was set up especially for this project. Tata will be a strategic partner, committing to buy the power for 25 years from the project, transferring technology and management skills, buying the carbon credits and also helping in raising funds for the project.

'We chose Tata Power because they are one of the biggest and with extensive experience in managing many private power projects in India,' said a senior official.

The move is aimed at testing the nascent hydro policy and the benefits of private investments in the hydro sector.

Tata power, which also trades in power, will be buying power at Nu 2.40 a unit, as compared to the current Nu 1.80 a unit export rate to India by Tala.

Tata will be a partner in the project for the next 25 years, after which Tata’s share in the project will revert fully back to the government at zero cost. The other partners are the pension board with a 15 percent stake and Druk Green Power Corporation with a majority 59 percent stake. The Asian Development Bank will be offering a significant part of the loans needed for the project, apart from the equity brought in by the stakeholders. Officials pointed out that this project was not included in the 10,000 MW commitment made by GoI where, as of now, no private companies will be involved.