Japan Commits 13.7 Billion Yen in Loans for Bhutan’s Hydropower Development

Japan has committed 13.7 billion yen for hydropower projects in Bhutan, strengthening diplomatic ties. The loan will support three hydropower stations set to be constructed by 2029, enhancing Bhutan’s energy supply and capacity for power exports. This initiative marks Japan’s first hydraulic project in Bhutan, reflecting the kingdom’s geopolitical significance in South Asia.

Japan has pledged financial support of up to 13.7 billion yen (approximately $90 million) for hydropower development in Bhutan, strengthening diplomatic ties with the landlocked nation situated between India and China. The loan agreement was officially signed by Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi in February, as announced by the Foreign Ministry.

The project entails the construction of three hydropower stations, comprising one facility in Samdrup Jongkhar district and two in Samtse, with construction commencing in May and projected completion by 2029. This initiative is coordinated with the Japan International Cooperation Agency.

Bhutan plays a pivotal role in hydro-energy sales to India, particularly during the rainy season from June to October, contributing around 40% to its annual export value. The country’s dependence on hydroelectricity makes consistent power supply challenging, particularly in the dry season, with the energy demand anticipated to grow alongside economic development.

One of the proposed facilities will be a “storage hydropower” plant utilizing a dam to regulate water storage for electricity generation. This design is expected to alleviate some power demand during drier periods, according to a Japanese ministry official.

Japan’s aid aims to foster a stable energy supply and promote power exports during monsoon months, thus contributing to Bhutan’s economic and social development while supporting regional decarbonization efforts. This represents Bhutan’s inaugural hydraulic project backed by Japan.

Additionally, Japan recognizes Bhutan, home to nearly 800,000 people, as geopolitically significant, continuing to cultivate friendly diplomatic relations, especially given Bhutan’s substantial economic reliance on India and lack of formal ties with China.

In summary, Japan’s commitment of 13.7 billion yen for Bhutan’s hydropower plants signifies a crucial step in fortifying bilateral relations. The project, expected to generate exportable energy and help stabilize Bhutan’s power supply, aligns with Japan’s goals of fostering economic development and environmental sustainability in the region. This collaboration also highlights Bhutan’s strategic importance amid its geographical positioning between India and China.

Original Source: english.kyodonews.net