The Japan Bank for International Cooperation (JBIC) has signed an ODA loan of up to ¥3.576bn (US$30mn) with the government of Bhutan, to finance a rural electrification project. This is the first ODA loan JBIC has given to Bhutan, to support the largest electrification project ever undertaken there.
The project aims to supply electric power to roughly 15,000 households in the rural areas of Bhutan, by constructing power transmission line networks, stretching around 2,400km and linking 80 locations. Proceeds of the loan are to be invested in power distribution facilities and construction supervision.
Developing electric power and other public services is difficult in Bhutan, due to steep mountains separating scattered rural villages. The electrification rate in rural households remains as low as 39%, despite the fact that since 2005, nearly all households in urban areas have access to electric power.
The government is therefore keen to reduce the divide between the rural and urban areas and develop a basic infrastructure that will achieve sustainable growth. The project is expected to help develop the economy and reduce poverty.
Bhutan follows a unique development philosophy called ‘Gross National Happiness’, with the objective of securing a fair and happy society. This offers a generous welfare system that includes a free medical service, and a mandate to secure at least 60% of its land as woodland.
Under this ODA loan-financed project, a variety of considerations are to be implemented including; minimising impacts of the distribution network development on the natural environment and reducing high electricity charges for the poor. JBIC continues to support Bhutan’s national development policy through this assistance.