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

Japan is granting 13.7 billion yen ($90 million) in loans for hydropower projects in Bhutan, scheduled for construction start in May 2024. The initiative aims to boost Bhutan’s energy supply and exports amidst rising demand and economic growth. This represents Japan’s first hydropower support for Bhutan, enhancing bilateral relations in a geopolitically significant partnership.

Japan is set to extend loans amounting to approximately 13.7 billion yen (around $90 million) to support a hydropower plant initiative in Bhutan, enhancing the bilateral relationship between the two nations. Signing the loan agreement were Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi, as reported by the Foreign Ministry.

The project entails the construction of three hydropower stations, with one located in Samdrup Jongkhar and two in Samtse, bordering India. Construction is expected to commence in May, aiming for completion by 2029. This initiative is managed by the Japan International Cooperation Agency (JICA).

Bhutan’s economy significantly benefits from selling surplus hydro-energy to India during the rainy season, which constitutes approximately 40 percent of its annual exports. The country primarily relies on hydroelectricity but faces challenges in energy supply during the dry season, with rising energy demands paralleling its economic growth.

Among the three facilities, one will be a “storage hydropower” plant that utilizes a reservoir to manage water storage and regulate electricity generation timing, addressing power demands during dry spells. A representative from the Japanese ministry noted that this will assist in stabilizing Bhutan’s energy supply.

Japan’s involvement aims to facilitate Bhutan’s energy stability and promote power exports during the wet season, thereby contributing to the nation’s economic, social development, and the decarbonization efforts in Southwest Asia. Notably, this project marks Japan’s first engagement in supporting a hydropower initiative for Bhutan, which is economically dependent on India and lacks diplomatic relations with China.

Japan perceives Bhutan, a nation of nearly 800,000 inhabitants that emphasizes the Gross National Happiness index, as geopolitically significant and continues to nurture friendly ties with the Himalayan kingdom.

In conclusion, Japan’s provision of significant financial support for Bhutan’s hydropower plants represents a strategic effort to strengthen diplomatic and economic ties. Not only will this project enhance Bhutan’s energy supply and export potential, but it also aligns with broader commitments to regional decarbonization and sustainable development. The investments signal Japan’s ongoing interest in supporting Bhutan amidst its unique geopolitical landscape.

Original Source: english.kyodonews.net