Japan Allocates 13.7 Billion Yen Loans for Bhutan’s Hydropower Development

Japan is granting 13.7 billion yen ($90 million) in loans for Bhutan’s hydropower plants to strengthen bilateral relations. The project involves building three hydropower stations, set to begin in May and finish in 2029. This initiative will help stabilize Bhutan’s energy supply, particularly during dry spells, supporting its economic growth and energy exports to India.

Japan is providing approximately 13.7 billion yen (equivalent to $90 million) in loans for a hydropower project in Bhutan, aimed at strengthening ties with the nation situated between India and China. The loan agreement was signed in New Delhi in February by Japanese Ambassador to Bhutan, Keiichi Ono, and Bhutan’s ambassador, Vetsop Namgyel, according to the Foreign Ministry.

The project includes the construction of three hydropower stations, one in Samdrup Jongkhar and two in Samtse, both near the Indian border. Construction is anticipated to commence in May and is scheduled for completion in 2029, as stated by the Japan International Cooperation Agency, which is backed by the government.

Bhutan’s economy heavily relies on selling surplus hydro-energy to India, especially during the rainy season from June to October, constituting approximately 40% of its annual exports. Although the kingdom primarily utilizes hydroelectricity, it faces challenges in meeting energy demands during the dry season, with a continual rise in power demands tied to economic growth.

Among the planned facilities, one will feature a “storage hydropower” system that enables water storage in a reservoir via a dam, allowing for managed electricity generation timing. According to a Japanese ministry official, this facility aims to alleviate some energy requirements during dry spells.

Japan’s objectives include enhancing Bhutan’s energy supply stability and facilitating electricity exports during the wet season. This initiative is expected to contribute positively toward Bhutan’s economic and social development while promoting decarbonization efforts within the Southwest Asian region, according to the ministry.

This partnership marks Japan’s first support for a hydropower project in Bhutan, as the country remains economically reliant on India and lacks formal diplomatic relations with China. Japan perceives Bhutan, with its population of nearly 800,000 and its focus on the Gross National Happiness index, as a geopolitically significant ally and has consistently nurtured amicable relations with it.

In summary, Japan’s provision of 13.7 billion yen in loans for Bhutan’s hydropower initiative signifies a strategic partnership aimed at enhancing Bhutan’s energy reliability and fostering economic growth. This venture underscores Japan’s commitment to contributing to regional decarbonization and acknowledges Bhutan’s reliance on hydroelectric power. As Bhutan embarks on this project, it underscores the significance of international collaboration in achieving energy stability.

Original Source: english.kyodonews.net