Japan Extends 13.7 Billion Yen Loans to Bhutan for Hydropower Development

Japan is providing 13.7 billion yen in loans for Bhutan’s hydropower project, aiming to strengthen diplomatic relations. The initiative involves constructing three hydropower stations, with plans to start in May 2023 and complete by 2029, facilitating Bhutan’s energy supply and exports to India.

Japan has pledged approximately 13.7 billion yen (equivalent to $90 million) in loans to support hydropower plants in Bhutan, reinforcing diplomatic relations between the two nations. This agreement was formalized in February in New Delhi, with the signatures of Japanese Ambassador to Bhutan, Keiichi Ono, and Bhutanese Ambassador, Vetsop Namgyel, as announced by the Foreign Ministry.

The project entails the construction of three hydropower stations, one located in the Samdrup Jongkhar district and two in Samtse, both of which border India. Construction is slated to commence in May and is expected to conclude by 2029, facilitated by the Japan International Cooperation Agency.

Bhutan’s hydropower sector is crucial, particularly during the rainy season from June to October when surplus hydro-energy is sold to India. This industry accounts for approximately 40 percent of Bhutan’s annual export value, as reported by the ministry.

The Himalayan kingdom primarily relies on hydroelectric power and faces challenges in meeting energy demands during the dry season. With its economy anticipated to grow, energy demand is projected to increase, necessitating new solutions, including the installation of a storage hydropower plant.

This facility will utilize a reservoir to store water, thereby offering flexibility in electricity generation, especially during periods of low rainfall. According to a Japanese ministry official, it is designed to help satisfy power demands during dry spells.

In assisting Bhutan, Japan aims to enhance the country’s energy stability while promoting power exports during the wet season, thereby contributing to economic and social progress, along with decarbonization efforts in the Southwest Asian region, as stated by the ministry.

This marks the first hydropower project that Japan has supported in Bhutan. The small kingdom, which heavily relies on economic ties with India, currently lacks formal diplomatic relations with China. Japan recognizes Bhutan’s geopolitical significance, with its population of nearly 800,000 and commitment to the Gross National Happiness index, facilitating long-standing amicable relations between the two nations.

In summary, Japan’s financial commitment of 13.7 billion yen to Bhutan’s hydropower initiative underscores its diplomatic strategy to strengthen ties with the nation. The planned construction of three hydropower plants is expected to significantly enhance Bhutan’s energy security and economic growth while facilitating power exports to India. This initiative represents a vital step for Bhutan’s development and its reliance on clean energy resources, highlighting Japan’s supportive role in the region’s decarbonization movement.

Original Source: english.kyodonews.net