Japan Extends 13.7 Billion Yen Loans to Bhutan for Hydropower Development

Japan will extend loans worth approximately 13.7 billion yen to support Bhutan’s hydropower projects. The agreement, signed in February, includes the construction of three hydropower stations to be completed by 2029. This assistance aims to stabilize Bhutan’s energy supply, promote exports, and facilitate economic growth amid rising energy demands.

Japan has announced its intention to provide approximately 13.7 billion yen (equivalent to $90 million) in loans for the development of a hydropower plant project in Bhutan, aimed at strengthening bilateral relations with the nation located between India and China. The loan agreement was formalized in February in New Delhi, where Japanese Ambassador to Bhutan Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel signed the relevant documents.

The project entails the construction of three hydropower stations, with one located in the Samdrup Jongkhar district and two in Samtse, which borders India. Construction is scheduled to commence in May 2023, with an expected completion date of 2029, as indicated by the Japan International Cooperation Agency.

Selling surplus hydroelectric energy to India during the rainy season, particularly from June to October, is integral to Bhutan’s economy, contributing approximately 40 percent of its annual exports. Bhutan predominantly relies on hydroelectricity but faces challenges in meeting energy demands during the dry season. As the nation’s energy needs grow in tandem with economic development, stable energy supply becomes increasingly critical.

Among the three facilities being developed, one will be designated as a “storage hydropower” plant. This facility will utilize a dam to store water in a reservoir, allowing for more efficient management of electricity generation, especially during periods of low rainfall. A Japanese ministry official noted that this project will address energy demands during those dry spells.

Japan’s support of this hydropower initiative aims to foster stable energy supply for Bhutan, enhancing its capacity for power exports during wetter months. It also serves to promote economic growth and support the decarbonization efforts within the Southwest Asian region. This project marks the first instance of Japanese assistance in establishing a hydraulic plant in Bhutan, which substantially relies on India for economic support and lacks formal diplomatic relations with China.

Japan recognizes Bhutan’s strategic position and its focus on Gross National Happiness as significant, maintaining a cooperative and friendly relationship with the Himalayan nation.

In summary, Japan’s provision of loans for Bhutan’s hydropower project symbolizes a concerted effort to enhance bilateral relations and facilitate economic growth. By investing in storage and hydroelectric facilities, Japan aims to support Bhutan’s energy independence and its ability to export surplus energy. This initiative serves as a foundation for further economic collaboration while reinforcing Japan’s geopolitical interests in the region.

Original Source: english.kyodonews.net