Japan Extends Loans for Hydropower Development in Bhutan

Japan will provide 13.7 billion yen ($90 million) in loans to Bhutan for hydropower plants. The initiative aims to strengthen ties and support Bhutan’s energy needs and economic growth. Construction is scheduled to start in May and end in 2029, with one plant designed to adjust power generation during dry seasons.

Japan is set to extend loans of up to approximately 13.7 billion yen (equivalent to $90 million) for a hydropower plant initiative in Bhutan. This loan agreement, aimed at strengthening relations with Bhutan, was formalized by Japanese Ambassador Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi this past February.

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

Bhutan’s economy heavily relies on the export of hydroelectric power, particularly during the rainy season from June to October, which comprises about 40 percent of its annual exports. However, Bhutan faces challenges in meeting energy demands during the dry season, compounded by the increasing energy requirements driven by economic growth.

Among the three hydropower facilities, one will be a “storage hydropower” plant utilizing a dam to create a reservoir for regulating electricity generation. A Japanese ministry official emphasized that this initiative will assist in managing power demand during dry periods.

Japan is committed to aiding Bhutan in achieving a stable energy supply while enhancing power exports during the wet season. This support aims to contribute to Bhutan’s economic stability and social development as well as to promote decarbonization efforts across the Southwest Asian region. Notably, this marks Japan’s first involvement in a hydraulic project in Bhutan, further emphasizing Bhutan’s economic dependence on India amid its lack of diplomatic ties with China.

Japan recognizes Bhutan’s strategic importance and its population of nearly 800,000, aligning with its focus on the Gross National Happiness index while fostering amicable bilateral relations.

In conclusion, Japan’s provision of loans for hydropower projects in Bhutan marks a significant step in strengthening bilateral relations. The initiative not only aims to support Bhutan’s energy stability and economic development but also enhances its capacity for power exports. This collaboration reflects Japan’s recognition of Bhutan’s geopolitical significance and the necessity of sustainable energy solutions for continued growth.

Original Source: english.kyodonews.net