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

Japan is providing approximately 13.7 billion yen (about $90 million) in loans to Bhutan for hydropower plants, aiming to enhance bilateral relations and support the country’s energy security. The project, set to commence in May and complete by 2029, will aid Bhutan in stabilizing its electricity supply and boosting economic growth through hydro-energy exports, particularly to India during the rainy season.

Japan is set to extend approximately 13.7 billion yen (around $90 million) in loans to support the development of hydropower plants in Bhutan, further strengthening diplomatic relations with this landlocked nation, situated between India and China. The formal agreement was signed in February by Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi, as per information from the Foreign Ministry.

The project encompasses the construction of three hydropower stations: one located in Samdrup Jongkhar and two in Samtse, with construction slated to commence in May and anticipated completion by 2029. This initiative is spearheaded by the Japan International Cooperation Agency.

Hydropower plays a vital role in Bhutan’s economy, with the sale of surplus hydro-energy to India accounting for approximately 40 percent of the nation’s annual exports. The Himalayan kingdom predominantly relies on hydroelectricity but faces challenges in meeting energy demands during the dry season, which, coupled with economic growth, is expected to escalate.

Among the facilities, one will serve as a “storage hydropower” plant, utilizing a dam to create a reservoir for regulated electricity production. A Japanese official noted this facility will help address power shortages during dry periods.

Japan’s assistance will aid Bhutan in achieving a stable energy supply and enhancing power exports during the monsoon season, thus contributing to the country’s economic and social advancement and supporting decarbonization initiatives within the region. This initiative marks the first hydraulic project in Bhutan backed by Japan. Historically, Bhutan’s economic reliance on India is significant, while it maintains no official relations with China.

Recognizing Bhutan’s strategic importance and its focus on Gross National Happiness, Japan has consistently fostered positive relations with the nation, which has a population nearing 800,000.

In conclusion, Japan’s financial commitment of up to 13.7 billion yen for hydropower projects in Bhutan underscores its intent to fortify bilateral relations and assist in the country’s energy security. The initiative will not only support Bhutan’s economic growth and ability to export energy but also promote sustainability and regional decarbonization efforts. As the Himalayan kingdom prepares to execute this project, the implications for its energy dependency and economic trajectory remain significant.

Original Source: english.kyodonews.net