The Organization of the Petroleum Exporting Countries (OPEC) Fund for International Development extends its first USD 50 million (M) loan to Bhutan to boost hydropower. The OPEC Fund for International Development has signed its first loan agreement with the Kingdom of Bhutan, marking a historic milestone in the partnership.
According to the Ministry of Finance (MoF), the USD 50M loan will support the development of two small hydropower plants, namely, Gamri and Begana hydropower plants, aimed at strengthening Bhutan’s energy security.
“Our first-ever loan to Bhutan marks a significant milestone in our partnership and reflects the OPEC Fund’s commitment to supporting Bhutan’s development priorities. By supporting the development of the Gamri and Begana hydropower plants, we are contributing to Bhutan’s sustainable energy future,” said OPEC Fund President Abdulhamid Alkhalifa at the signing during the 2024 World Bank/IMF Annual Meetings in Washington, DC.
In addition, the President said that these new renewable energy sources will not only bolster the national grid but also improve livelihoods and strengthen the local economy.
Finance Minister Lekey Dorji said, “Bhutan is a nation blessed with abundant natural resources, particularly in hydropower. By diversifying our energy sources, Bhutan is reducing its dependency on imported fossil fuels, stabilizing energy costs and promoting job creation in green sectors.”
In addition, Finance Minister also said that at the same time, pursuing development of renewable energy resources supports Bhutan’s commitment to remaining carbon neutral and contributes to our global climate goals.
Bhutan has enormous hydropower potential, boasting over 35,000 MW of clean renewable energy from more than 150 sites nationwide. Bhutan has so far developed just 7% of its hydropower potential. The two new plants -Gamri (45 MW) in the east of the country and Begana (25 MW) in the west will mainly cover local demand through mini grids, but will have the option to plug into Bhutan’s main grid, which already exports energy to neighboring India and Bangladesh.
The facilities are expected to improve power reliability for around 50,000 households in key regions including Trashigang, the most densely populated area of the country and the primary route for trade with India and the capital Thimphu, according to the Finance Ministry.
Meanwhile, the OPEC Fund for International Development is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively.
The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world.
The OPEC Fund was established in 1976 with a distinct purpose to drive development, strengthen communities and empower people. OPEC Fund is a people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment, clean water and sanitation, healthcare, and education.
To date, the OPEC Fund has committed about USD 27 billion (B) to development projects in over 125 countries with an estimated total project cost of more than USD 200B.
Sherab Dorji | Business Bhutan
