Japan Extends 13.7 Billion Yen Loan for Hydropower Development in Bhutan

Japan is providing about 13.7 billion yen ($90 million) for hydropower projects in Bhutan, per an agreement forged in February. This investment focuses on constructing three hydropower stations, aimed at easing Bhutan’s energy challenges amid rising demand and will strengthen ties between the two nations.

Japan is set to extend loans amounting to approximately 13.7 billion yen (around $90 million) for a hydropower plant development in Bhutan, aimed at strengthening bilateral relations with the nation situated between India and China. This agreement was formalized in February when Japanese Ambassador to Bhutan, Keiichi Ono, and Bhutanese Ambassador Vetsop Namgyel signed the loan documents in New Delhi, as reported by the Foreign Ministry.

The implementation of three hydropower stations—one in Samdrup Jongkhar and two in Samtse, both near the Indian border—will commence in May, with an expected completion date in 2029. The Japan International Cooperation Agency (JICA), which is government-backed, will oversee the project developments, ensuring technological transfer and investment in the region.

Bhutan intends to sell surplus hydroelectric energy to India during the wet months from June to October, a practice that constitutes about 40 percent of its annual export value. However, the country often faces challenges in meeting its energy demand during dry periods, exacerbated by its rising economic growth and dependence on hydroelectricity.

Among the three stations, one will be a “storage hydropower” facility utilizing a dam for water storage, thus allowing for regulated electricity generation, even during dry spells. A Japanese ministry official indicated that this initiative is expected to help mitigate power shortages in those critical times.

Japan’s support is aimed at fostering stable energy supplies for Bhutan while facilitating power exports during peak seasons. This collaboration is positioned as a step towards Bhutan’s economic and social development and contributes to the regional efforts toward decarbonization, as cited by the Ministry. This hydropower project marks Japan’s first such significant investment in Bhutan, a country that relies heavily on India and lacks diplomatic relations with China.

Geopolitically, Bhutan is considered important by Japan, which recognizes its population of nearly 800,000 and commitment to emphasizing the Gross National Happiness index in its policy framework, maintaining friendly diplomatic ties with the country.

In conclusion, Japan’s commitment of 13.7 billion yen towards hydropower plants in Bhutan signifies a strategic partnership aimed at enhancing energy security and promoting economic growth in Bhutan. This collaboration not only underscores Japan’s role in supporting Bhutan’s energy needs but also emphasizes the regional dynamics involving India and China. The initiative reflects both nations’ mutual interests in achieving stability and sustainability in the region’s development.

Original Source: english.kyodonews.net