In a landmark development for Bhutan’s energy landscape, the Ministry of Finance inked a $50 million loan agreement yesterday with the OPEC Fund for International Development. This significant financial infusion marks the OPEC Fund’s inaugural loan to Bhutan, specifically designated to advance the Gamri-I and Begana hydropower projects.
The Gamri-I project, slated to generate 45MW, is located in Trashigang, while the Begana project in Thimphu will add 25MW to the national grid. These initiatives are pivotal in harnessing Bhutan’s substantial hydropower potential, which currently stands at an estimated 35,000 MW across more than 150 sites. To date, Bhutan has tapped only seven percent of this vast renewable resource.
Former Prime Minister Dr. Lotay Tshering, representing Bhutan, attended the OPEC Fund Development Forum 2023 in Vienna at the invitation of the Fund’s Director General, Dr. Abdulhamid Alkhalifa. During the forum, Dr. Tshering engaged in comprehensive discussions with Dr. Alkhalifa, exploring future collaborations to bolster Bhutan’s sustainable energy ambitions. These talks followed a coordination meeting held in July of the previous year, signaling a deepening partnership between Bhutan and the OPEC Fund.
Finance Minister Lekey Dorji underscored the strategic importance of these projects, noting that diversifying Bhutan’s energy portfolio will significantly reduce reliance on imported fossil fuels. This shift not only stabilizes energy costs but also paves the way for green job creation within the country. “Advancing renewable energy development aligns seamlessly with Bhutan’s commitment to carbon neutrality,” Dorji stated. “It reinforces our dedication to global climate objectives while fostering economic resilience.”
Dr. Abdulhamid Alkhalifa lauded the agreement as a cornerstone for Bhutan’s sustainable energy future. “These renewable energy projects will enhance the national grid, uplift local livelihoods, and strengthen the economy,” he remarked. The Gamri and Begana plants are designed to primarily serve local demands through mini grids, with the capacity to integrate into Bhutan’s main grid. This integration is crucial as Bhutan already exports electricity to neighboring India and Bangladesh.
The new hydropower facilities are projected to improve power reliability for approximately 50,000 households, particularly benefiting Trashigang—the country’s most populous region and a vital trade corridor to India—and the capital city, Thimphu. Enhanced energy infrastructure in these areas is expected to drive economic growth and improve the quality of life for residents.
Bhutan’s recent induction as the 125th member of the OPEC Fund further cements its role in the global renewable energy movement. Established in 1976, the OPEC Fund for International Development is a prominent international institution that channels financing from its member countries to support development projects in non-member nations. To date, the Fund has allocated over $27 billion to various initiatives worldwide and continues to expand its support through technical assistance and advisory services.
This $50 million loan aligns with the OPEC Fund’s broader strategy to combat energy poverty and mitigate climate change, as outlined in its climate action plan presented at COP 27. Additionally, the Fund has committed to providing ongoing support to Bhutan through its Climate Finance and Energy Innovation Hub, aiding the country in achieving its Sustainable Development Goals (SDGs) 7 and 13, as well as its Nationally Determined Contributions (NDCs).
As Bhutan moves forward with these hydropower projects, the nation sets a powerful example of sustainable development and international cooperation, reinforcing its position as a leader in renewable energy and environmental stewardship.
