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

Japan will provide approximately 13.7 billion yen in loans for hydropower projects in Bhutan, focusing on strengthening bilateral ties and supporting Bhutan’s energy security. The project includes three hydropower stations, set to begin construction in May and finish by 2029, addressing Bhutan’s reliance on hydroelectricity and its economic growth.

Japan has committed up to 13.7 billion yen (approximately $90 million) in loans for a hydropower plant initiative in Bhutan, aiming to strengthen bilateral relations with the nation situated between India and China. The agreement was formalized in February by Japanese Ambassador to Bhutan, Keiichi Ono, and his Bhutanese counterpart, Vetsop Namgyel, in New Delhi, as noted by the Foreign Ministry.

The project entails the construction of three hydropower stations—one located in Samdrup Jongkhar and two in Samtse, both adjacent to India. Construction is slated to commence in May, with a completion target set for 2029, according to the Japan International Cooperation Agency, which is backed by the government.

Bhutan significantly relies on the sale of surplus hydro-energy to India during the monsoon season, from June to October, which comprises around 40 percent of the nation’s annual export value. As Bhutan struggles to meet energy demands during dry seasons, with growing economic challenges ahead, the continued investment in hydroelectricity is deemed crucial.

One of the new plants will utilize a storage hydropower system, utilizing a dam to create reservoirs that can regulate electricity generation timing. A Japanese ministry official remarked that this would provide vital power support during dry periods when demand peaks.

Japan’s support aims to help Bhutan secure a reliable energy supply while enhancing power export capabilities during wet months, furthering economic and social development, and supporting regional decarbonization efforts. This initiative marks Japan’s first hydropower cooperation project in Bhutan, which remains economically reliant on India and lacks official ties with northern neighbor China. Geopolitically, Japan considers Bhutan, with its population of roughly 800,000 and focus on the Gross National Happiness index, to be of significant importance and has fostered cordial relations with the kingdom.

The collaboration between Japan and Bhutan on hydropower development signifies a strategic partnership aimed at promoting economic stability and energy security in Bhutan. By investing in hydropower infrastructure, Japan seeks to support Bhutan’s energy needs and enhance its export capabilities while addressing broader environmental objectives in the Southwest Asian region. This initiative reflects the growing significance of Bhutan in regional politics, particularly in relation to India and China, establishing a stronger foundation for future collaboration.

Original Source: english.kyodonews.net