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Energy for better living conditions 2010
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Energy for better living conditions in Bhutan

"Energy equates to quality of life and progress. Thanks to today's loan agreement, more than 1,000 Bhutanese households will be supplied with electrical power. This shall clearly improve living conditions and help climate protection, as people will no longer depend on firewood and lamp oil," declared Foreign Minister Michael Spindelegger at the official signing of a 5.8 million euro loan agreement for rural electrification, concluded between Austria and Bhutan. The loan will finance the grid connection of eleven mountain villages at an altitude of over 3,000 m in the Laya Gewog district of northern Bhutan.

The project is the latest element in relation to Austria's comprehensive commitment to supplying Bhutanese villages with electricity. Austria supports Bhutan's ambitious goal of having the entire country connected to a national grid network by 2013. "Support of Bhutan in its ongoing development of hydropower resources and the electrification of remote rural areas has, within the framework of the Austrian Development Cooperation programme, been a concern of ours for more than fifteen years. Austria has the necessary expertise and technology suitable for sensitive mountain areas. By the end of 2008, some 1,700 households had been connected to the national system thanks to Austrian funding," claimed the Foreign Minister in a gratifying mid-term review.

The project is also a good example of how development co-operation can go hand in hand with economic commitment: "Today, the production and export of electrical power are driving forces of Bhutan's economy. Some 40 percent of national revenues derive from this sector, and following the end of the current five-year-plan this figure will probably rise to as much as 60 percent," affirmed Spindelegger. "I am glad that Bhutan relies on the sustainable use of water.

Austria was instrumental in building two power stations, which today generate some 27 percent of the country's energy requirements. Technical aid, the transfer of know-how and numerous training measures all ensure the sustainable future operation of these plants," continued the Foreign Minister.

Financing the development of hydropower in a market-friendly manner is gaining in importance. The Dagachu hydro plant is the first project to be financed on a purely commercial basis. The financing of this project was designated Trade Finance Deal of the Year 2009 by Trade Finance Magazine.

Source: Federal Ministry for European and International Affairs, Austrian Development Agency, September 2010
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