Japan has granted its largest-ever concessional loan to Bhutan, amounting to over 13.6 billion Japanese Yen which is approximately Nu 7.8bn, for the construction of three small hydropower plants in Bhutan. Bhutan’s finance minister and the Chief Representative of Japan International Cooperation Agency (JICA) signed the Official Development Assistance or ODA loan agreement, today in Thimphu. According to JICA, this marks Japan’s first direct support for hydropower development in Bhutan.
The loan will facilitate the procurement of electromechanical equipment for the 90-megawatt Jomori Hydropower Plant in Samdrup Jongkhar, along with the 26-megawatt Druk Bindu I and II plants in Samtse. Moreover, it will also be used for procurement and laying of transmission lines, and consulting services.
The construction of the three projects began in 2023.
The loan comes with highly concessional terms with an annual interest rate of 2.05 per cent for construction and 0.55 per cent for consulting services. The repayment period is 25 years, with a seven-year grace period.
Officials said these projects aim to meet Bhutan’s growing power demand and boost electricity exports during the monsoon, contributing to the country’s socio-economic development and decarbonisation efforts across the South Asia region.
The loan agreement follows an exchange of notes between the Royal Bhutanese Embassy and the Embassy of Japan in New Delhi recently.
Lekey Dorji, Finance Minister said “Hydropower is one of the main engines of Bhutan’s economy. During the next 15 years, the government envisages building an additional 20,000 megawatts of electricity, 15,000 through renewable hydropower plants and 5,000 through solar plants. This JICA loan will help us in achieving our dream.”
Yoichiro Kimata, Chief Representative of JICA Bhutan Office said “We would like to contribute to the hydropower plant constructions in order to achieve the Bhutanese government’s goal, which is set as an important plan and also as the strategy for Bhutan’s economic development.”
The project will be executed by the Druk Green Power Corporation, Druk Hydro Energy Limited, and Bhutan Power Corporation.
Jomori, Druk Bindu I and II hydropower plants are expected to be completed by May 2029.
Namgay Dema
Edited by Tshering Zam
