Japan will provide up to about 13.7 billion yen ($90 million) in loans for a hydropower plant project in Bhutan as part of efforts to deepen ties with the landlocked nation sandwiched between India and China.
Japanese Ambassador to Bhutan Keiichi Ono, who doubles as the envoy to India, and his Bhutanese counterpart, Vetsop Namgyel, signed documents regarding the loan agreement in New Delhi in February, according to the Foreign Ministry.
The construction of three waterpower stations, one in the district of Samdrup Jongkhar and two in Samtse, both bordering India, is set to start in May and is scheduled to be completed in 2029, according to the government-backed Japan International Cooperation Agency.
Selling surplus hydro-energy to India during the rainy season from around June to October is one of Bhutan's major industries, accounting for approximately 40 percent of its annual exports in value terms, according to the ministry.
The small Himalayan kingdom almost exclusively relies on hydroelectricity and has difficulty in securing enough power in the dry season, with the country's energy demand expected to keep rising along with its economic growth, the ministry said.
One of the three facilities will be a "storage hydropower" plant that uses a dam to store water in a reservoir so that it can adjust the timing of electricity generation. A Japanese ministry official said it will help meet some of the demand for power during dry spells.
By helping Bhutan realize a stable energy supply and promote power exports in the wet period, Japan aims to "contribute to the country's economic and social development and decarbonization of the Southwest Asian region," the ministry said.
For Bhutan, it is the first hydraulic plant project supported by Japan, the official said. The mountainous state is heavily dependent on India economically, and has no diplomatic ties with its northern neighbor China.
Japan views Bhutan, which has a population of nearly 800,000 and is known for its emphasis on the Gross National Happiness index, as geopolitically important and has maintained amicable relations.
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