Japan Commits 13.7 Billion Yen Loans to Support Bhutan’s Hydropower Projects

Japan has committed approximately 13.7 billion yen ($90 million) in loans for the development of hydropower projects in Bhutan. This initiative aims to solidify bilateral relations while addressing Bhutan’s energy needs, which heavily depend on hydroelectricity. Construction of three hydropower stations is set to commence in May and will play a pivotal role in boosting Bhutan’s economic growth and energy exports.

Japan has pledged approximately 13.7 billion yen ($90 million) in loans to support the construction of hydropower plants in Bhutan. This initiative is part of Japan’s broader strategy to strengthen relations with Bhutan, strategically located between India and China. The loan agreement was formalized in February in New Delhi between Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel, as reported by the Foreign Ministry.

The project in question involves the establishment of three hydropower stations: one in Samdrup Jongkhar district and two in Samtse, both adjacent to India. Construction is set to commence in May and is anticipated to be completed by 2029, as stated by the Japan International Cooperation Agency.

Bhutan significantly depends on hydroenergy, especially for export to India during the rainy season from June to October, which constitutes around 40 percent of its annual exports. The ministry noted that while Bhutan heavily relies on hydroelectricity, it faces challenges in meeting energy demands during the dry season due to rising energy needs amidst economic growth.

One of the hydropower facilities will incorporate a “storage hydropower” plant that utilizes a dam to conserve water in a reservoir, facilitating regulated electricity generation. This installation is expected to alleviate power shortages during dry periods, according to a Japanese ministry official.

Japan’s support aims to assist Bhutan in achieving a stable energy supply and enhancing power export capabilities during wet seasons, thereby contributing to economic development and decarbonization in Southwest Asia. Notably, this is Japan’s inaugural support for Bhutan’s hydraulic plant projects. Despite its economic reliance on India, Bhutan does not maintain diplomatic relations with China. Japan recognizes the geopolitical significance of Bhutan, which is home to nearly 800,000 residents and is renowned for prioritizing Gross National Happiness.

In conclusion, Japan’s commitment of 13.7 billion yen in loans for Bhutan’s hydropower development signifies a strategic partnership aimed at promoting Bhutan’s energy stability and economic growth. The construction of these facilities is crucial for Bhutan, given its reliance on hydroelectric power and the challenges posed by seasonal energy demands. Through this collaboration, Japan aspires to enhance Bhutan’s energy exports and foster sustainable regional development.

Original Source: english.kyodonews.net