1. The Government of Japan agreed today to extend a loan assistance of 2,187 million yen (approximately 27 million US dollars) to the Royal Government of Bhutan, for the “Rural Electrification Project (Phase 2)”. The ‘Exchange of Notes’ to formalize the soft loan assistance was conducted in Thimphu between H.E. Mr. Akitaka Saiki, Ambassador of Japan to the Kingdom of Bhutan, and H.E. Lyonpo Wangdi Norbu, Minister of Finance, Royal Government of Bhutan.

2. The loan signed today was initially scheduled to be extended in the FY2010. Although it was postponed due to the earthquake which hit Japan in March, the Government of Japan is fully committed to its pledge with the Royal Government of Bhutan, and today, Japan extended the loan without any delay for the project and without any deduction from its previous commitment.

3. By constructing electricity distribution networks in the rural areas, this project aims to improve living standards of people in the rural areas, and to enable the villagers to access improved public services such as health and education. The project is also expected to help Bhutan’s mitigation measures, including reduction of emissions through reduced consumption of kerosene and fuelwood, in line with Japan’s assistance for developing countries up to 2012, announced in December 2009.

4. Japan has already extended a loan for Bhutan’s electrification project in FY2007, and today’s loan will further help the Royal Government of Bhutan achieve the 10th Five Year Plan’s objective of “Electricity for All” by 2013. Japan’s contribution to the electrification project in Bhutan during the 10th Five Year Plan is expected to benefit as many as 19,050 households, accounting for 43% of the total households covered under the Plan.

5. The concessional loan will be made available through the Japan International Cooperation Agency (JICA), which signed the Loan Agreement with the Royal Government of Bhutan today, at the interest rate as low as 0.2% per annum, with the repayment period of 40 years including the grace period of 10 years.

6. The Government of Japan hopes that this loan assistance would help improve the quality of life, especially in rural areas, as envisaged in the 10th Five Year Plan, as well as contribute to further strengthening of the friendly relationship between Japan and Bhutan.