Japan Extends 13.7 Billion Yen Loans to Bhutan for Hydropower Development

Japan will provide about 13.7 billion yen ($90 million) in loans to Bhutan for hydropower projects, aimed at strengthening ties and enhancing energy stability. The construction of three stations will begin in May, targeting completion by 2029. This project marks Japan’s first hydropower initiative in Bhutan, supporting the country’s economic growth through increased power exports.

Japan is set to extend loans amounting to approximately 13.7 billion yen ($90 million) to support hydropower plant development in Bhutan. This initiative reflects Japan’s commitment to strengthening its relationship with Bhutan, which is located between India and China. The loan agreement was formalized in February by Japanese Ambassador Keiichi Ono and Bhutanese Ambassador Vetsop Namgyel in New Delhi, as announced by the Foreign Ministry.

Construction will commence in May on three hydropower stations, with one situated in Samdrup Jongkhar and the other two in Samtse, both of which border India. Completion is anticipated by 2029, as outlined by the Japan International Cooperation Agency, which is backed by the government. Bhutan aims to enhance its economy by exporting surplus hydro-energy to India during the rainy season, which spans from June to October and constitutes roughly 40 percent of Bhutan’s annual exports.

The Himalayan nation primarily operates on hydroelectric power but struggles with energy supply during dry spells, with rising energy demand anticipated alongside economic growth, according to the ministry. One of the facilities will be a storage hydropower plant, designed to store water in a reservoir for optimizing electricity generation during periods of low supply.

Japan’s initiative seeks to assist Bhutan in achieving a stable energy supply while fostering power exports during the wet season. It is an effort to contribute to Bhutan’s socio-economic development and the decarbonization of Southwest Asia. This marks Japan’s inaugural support for a hydropower project in Bhutan, which maintains a heavy economic reliance on India and lacks diplomatic relations with China.

Japan recognizes Bhutan’s strategic geopolitical importance, particularly with its population of around 800,000 and its unique focus on the Gross National Happiness index, thereby underpinning a history of amicable bilateral relations.

In conclusion, Japan’s provision of 13.7 billion yen in loans to Bhutan signifies a strategic move to strengthen diplomatic ties while supporting Bhutan’s hydropower infrastructure. The project aims to enhance Bhutan’s energy stability and economic export potential, particularly during the rainy season. This partnership highlights Japan’s commitment to regional development and Bhutan’s reliance on hydroelectric power amidst its growing energy needs.

Original Source: english.kyodonews.net