Japan Extends 13.7 Billion Yen Loan to Support Bhutan’s Hydropower Development

Japan is providing 13.7 billion yen in loans for Bhutan’s hydropower project to enhance relations. Three hydropower stations will be constructed, set to begin in May 2023 and finish by 2029. The initiative aims to stabilize Bhutan’s energy supply and boost power exports, addressing its economic reliance on India and geopolitical significance in South Asia.

Japan is set to extend approximately 13.7 billion yen (equivalent to $90 million) in loans for a hydropower plant initiative in Bhutan, aimed at strengthening relations between the two nations. This agreement was formalized in February during a signing ceremony in New Delhi, conducted by Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel, as reported by the Foreign Ministry.

The project will involve the construction of three hydropower stations: one located in Samdrup Jongkhar and two in Samtse, both of which are adjacent to India. Construction is slated to commence in May 2023, with the project expected to reach completion by 2029, as noted by the Japan International Cooperation Agency.

Bhutan relies heavily on hydropower, generating substantial revenue through the sale of surplus hydroelectric energy to India during the monsoon months, contributing approximately 40 percent to the nation’s annual export value. However, Bhutan faces challenges during the dry season, leading to increased energy demand in line with the country’s economic expansion.

The initiative includes the development of a “storage hydropower” plant, which utilizes a dam to store water and facilitates the adjustment of electricity production timing. This infrastructure is anticipated to alleviate power shortages during dry periods, according to a Japanese ministry representative.

Japan’s support aims not only to secure a stable energy supply for Bhutan but also to assist in enhancing power exports during wet seasons, thus facilitating the nation’s social and economic development and contributing to the decarbonization efforts in Southwest Asia. This undertaking marks Japan’s inaugural backing of Bhutan’s hydropower projects.

With no diplomatic relations with China and a significant reliance on India, Bhutan is crucial from a geopolitical perspective, especially given its population nearly reaching 800,000. Recognized globally for prioritizing Gross National Happiness, Bhutan maintains a positive diplomatic rapport with Japan.

Japan’s provision of loans for hydropower plants in Bhutan symbolizes a significant step in enhancing bilateral relations and supporting Bhutan’s energy sector. The initiative is set to improve Bhutan’s energy stability while reinforcing its economic growth and minimizing dependence on external energy resources. As Japan seeks to foster development and sustainability in the region, the project also highlights Bhutan’s strategic importance amidst its geographical position between India and China.

Original Source: english.kyodonews.net