Japan Extends Loans for Hydropower Development in Bhutan

Japan will extend loans of up to 13.7 billion yen to Bhutan for hydropower plant construction, aiming to deepen bilateral ties. Three facilities will be developed, which are crucial for Bhutan’s energy strategy and economic development as it relies heavily on hydroelectricity and exports to India.

Japan has announced its intention to provide approximately 13.7 billion yen (around $90 million) in loans for a hydropower plant project in Bhutan. This initiative seeks to strengthen bilateral relations with Bhutan, a small nation located between India and China. The agreement was signed in New Delhi by Japanese Ambassador Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel.

The project entails the construction of three hydropower stations, one located in Samdrup Jongkhar and two in Samtse, with construction set to commence in May and completion projected for 2029. The Japan International Cooperation Agency, which backs this endeavor, will oversee the project.

Hydropower is a vital industry for Bhutan, particularly due to its capacity to sell surplus hydro-energy to India during the rainy season, contributing approximately 40% to the nation’s annual export value. Given the Himalayan country’s reliance on hydroelectric power, securing sufficient energy during dry spells poses a significant challenge amid increasing energy demands driven by economic growth.

Among the planned facilities, one will function as a storage hydropower plant, utilizing a dam to store water in a reservoir, thereby allowing for improved management of electricity generation. A Japanese ministry representative emphasized that this facility will help alleviate power shortages during dry periods.

By aiding Bhutan in achieving a stable energy supply, Japan aims to promote economic and social development while contributing to the decarbonization efforts in the Southwest Asian region. This project marks Japan’s first hydraulic plant initiative in Bhutan, highlighting the latter’s heavy economic dependence on India, coupled with the absence of diplomatic relations with China.

Japan regards Bhutan, with its population of nearly 800,000 and a commitment to the Gross National Happiness index, as strategically significant, thus ensuring enduring friendly relations.

Japan’s commitment to fund hydropower projects in Bhutan represents a strategic effort to enhance bilateral ties while supporting Bhutan’s energy needs. The initiative aims not only to stabilize energy supply but also to boost Bhutan’s economy through increased power exports. This project marks a significant milestone in Japan-Bhutan relations, showcasing Japan’s investment in the region’s sustainable development and energy security.

Original Source: english.kyodonews.net