The loan agreement was formalised in an exchange of notes signed yesterday by Major General Vetsop Namgyel, Bhutan’s Ambassador to Japan, and Keiichi Ono, Japan’s Ambassador to Bhutan.
Under the agreement, the Japanese government will provide an Official Development Assistance (ODA) loan of Yen 13.688 billion (approximately USD 92 million ) to develop these projects and install necessary transmission lines.
The initiative is part of the country’s efforts to expand its renewable energy capacity and meet growing domestic energy demands.
The Druk Bindu I & II and Jomori hydropower plants are part of Bhutan’s five small hydropower projects aimed at enhancing energy security and promoting sustainable economic growth.
The construction of access roads for the Jomori and Druk Bindu I & II projects had already begun last year, ensuring contractors can reach key project components once civil works packages are awarded.
Druk Hydro Energy Ltd (DHyE), a subsidiary of Druk Green Power Corporation (DGPC), is overseeing the implementation of these projects in the country.
In addition to this support, Japan has previously extended two budgetary support loans to Bhutan. In 2022, Japanese Yen of 3.3 billion was provided as part of the Covid-19 Crisis Response Emergency Loan to address the economic impact of the pandemic.
In 2023, the Japanese government provided Yen 6.55 billion for the Development Policy Loan for Economic Recovery and Resilience Enhancement to promote post-pandemic economic stability and resilience.
Beyond energy, Japan has been a key contributor to Bhutan’s development across multiple sectors, including agriculture, telecommunications, rural electrification, education, and disaster management.
Japanese aid has supported infrastructure projects, school construction, medical equipment, and emergency services, providing fire engines, police patrol cars, ambulances, and farm machinery.
