Japan Offers 13.7 Billion Yen Loans to Support Bhutan’s Hydropower Projects

Japan has announced a loan of approximately 13.7 billion yen ($90 million) to Bhutan for developing hydropower plants, aiming to strengthen diplomatic relations and assist in energy stability. The construction will commence in May and is expected to conclude by 2029, addressing Bhutan’s energy challenges and supporting economic growth.

Japan has pledged loans of up to 13.7 billion yen (approximately $90 million) to support hydropower projects in Bhutan, aiming to strengthen diplomatic relations with the nation situated between India and China. The loan agreement was formalized by Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi earlier this year, as stated by the Foreign Ministry.

Construction of three hydropower stations is slated to begin in May, with completion expected by 2029. These facilities will be located in Samdrup Jongkhar and Samtse, near the Indian border, and are facilitated by the Japan International Cooperation Agency, which is government-backed.

Hydropower is vital for Bhutan’s economy, constituting about 40 percent of its annual exports. The country primarily sells surplus hydro-energy to India during the monsoon season from June to October. Bhutan faces challenges in meeting energy demands in the dry season and relies heavily on hydroelectricity, as its energy requirements are projected to rise.

One facility will feature a “storage hydropower” plant that incorporates a dam for water storage, thus enabling better management of electricity generation. A Japanese official indicated that this development would help alleviate power shortages during dry periods, thereby enhancing Bhutan’s energy stability.

Japan’s investment aims to support Bhutan’s energy supply, fostering economic and social development while advancing the decarbonization goals for the Southwest Asian region. This initiative marks Japan’s inaugural support for Bhutan’s hydropower project, underscoring the smaller nation’s economic dependency on India and its lack of diplomatic relations with China, its northern neighbor.

Japan holds Bhutan, with a population nearing 800,000 and a distinctive focus on the Gross National Happiness index, in high regard for its strategic geopolitical significance and has maintained amicable ties with the country.

In conclusion, Japan’s provision of loans for Bhutan’s hydropower plants signifies a strategic move to deepen bilateral relations while addressing Bhutan’s energy challenges. With the construction of three hydropower facilities set to begin, Japan aims to bolster Bhutan’s economic and social development, particularly through enhanced energy stability and export capacities. This initiative serves as a foundation for future cooperation between the two nations and highlights Bhutan’s significance in the regional geopolitical landscape.

Original Source: english.kyodonews.net