Japan to Provide Substantial Loans for Bhutan’s Hydropower Development

Japan will extend loans up to 13.7 billion yen for hydropower projects in Bhutan, enhancing bilateral relations and addressing energy challenges. The facilities will facilitate power exports to India and provide a stable energy supply, contributing to Bhutan’s economic growth and sustainability until completion in 2029.

Japan has announced its intention to provide up to 13.7 billion yen (approximately $90 million) in loans to support a hydropower plant project in Bhutan. This initiative is part of Japan’s strategy to strengthen its economic and diplomatic ties with Bhutan, a nation located between India and China. The loan agreement was finalized in February by Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi, as reported by the Foreign Ministry.

Construction on the hydropower facilities, which include one plant in Samdrup Jongkhar and two others in Samtse, is set to commence in May. The project, overseen by Japan International Cooperation Agency, is projected for completion by 2029. Notably, these plants aim to enhance Bhutan’s ability to sell surplus hydro-energy to India during the rainy season, particularly from June to October, which constitutes around 40 percent of Bhutan’s annual export revenue.

Bhutan’s energy landscape is predominantly reliant on hydroelectric power, yet the country faces challenges in meeting energy demands during dry spells. To address this, one of the new facilities will serve as a storage hydropower plant, utilizing a dam to manage water reservoirs and better synchronize electricity production.

Japan’s support is designed to facilitate a reliable energy supply in Bhutan, promoting power exports during the wet season while contributing to the socio-economic development and decarbonization efforts in Southwest Asia. This represents Japan’s first investment in a hydropower project within Bhutan, signifying a pivotal moment as Bhutan’s economy is notably dependent on India, with no formal relationships established with China.

Japan recognizes Bhutan as strategically significant, considering its population of around 800,000 and its focus on the Gross National Happiness index, thus fostering a stable diplomatic relationship.

In conclusion, Japan’s investment in Bhutan’s hydropower sector underscores a strategic partnership aimed at enhancing energy security and economic prosperity. The project not only addresses Bhutan’s energy challenges but also strengthens bilateral relations, promoting regional decarbonization and sustainable development. This initiative represents a critical step towards establishing a stable energy supply in Bhutan, reinforcing Japan’s commitment to supporting its ally in South Asia.

Original Source: english.kyodonews.net