European Investment Bank’s Vice-President Nicola Beer, spoke to Kuensel reporter Thukten Zangpo on EIB’s assistance to Bhutan. Excerpts. The European Investment Bank (EIB) was established in 1958 and is the lending arm of the European Union. It is a multilateral development bank and one of the largest providers of climate finance. This is the first time an EIB Vice-President has visited Bhutan.
What is the purpose of your visit?
We are the lending arm of the European Union (EU), with the 27 member states as shareholders. As the EU climate bank, we are dedicated to green financing, climate action, and climate adaptation projects. Bhutan is a very special partner for us because it is one of the world’s best role models for climate action and it is a carbon negative country. This makes Bhutan the perfect partner to finance projects that support the country’s climate agenda and sustainable economic development.
Bhutan and the EIB signed recently a first-ever project for a 30-year loan of Euro 150 million to unlock an estimated 310MW of new renewable energy generation under the EU’s Global Gateway Initiative. How do you think that it will help Bhutan’s energy challenges during the lean season, especially in winter?
The EIB signed the loan with the Royal Government of Bhutan, through the Ministry of Finance, and it is allocating Euro 150 million to Druk Green Power Corporation (DGPC) as promoter. The project pipeline consists mainly of small and mid-size run-of the river hydropower plants and solar photovoltaic plants, which will diversify the renewable energy sources of the country and address adverse impacts from climate change. In addition to the loan the EIB will also provide Euro 3.1 million for technical assistance.
Bhutan is blessed with abundant water and solar resources and has sufficient power during the summer and autumn seasons, however, during winter, electricity generation through hydropower is challenging due to water scarcity. We are here to support Bhutan to increase solar power generation to bridge the gap in winter.
The project will most likely kickstart with solar power, which can be installed rapidly. We have visited sites where the Government of the Royal Kingdom of Bhutan is testing different solar technologies. The installation of solar panels would be beneficial for Bhutanese and would help the households living in remote areas increase their access to energy.
What were the discussions with the ministries and agencies in Bhutan?
We had fruitful discussions on possible areas of further EIB investments with the Honorable Prime Minister of the Kingdom of Bhutan, Tshering Tobgay, Ministers or Secretaries from the Ministry of Finance, the Ministry of Infrastructure and Transport, the Ministry of Energy and Natural Resources, and the Ministry of Agriculture and Forests.
We are also exploring collaboration with the Government of the Kingdom of Bhutan and the private sector on other sustainable projects, including the Gelephu Mindfulness City (GMC). This is an interesting project that combines innovation, technology, finance and mindfulness to attract international private investors and create jobs for young Bhutanese.
We are also discussing timber production for both domestic construction and export. Other areas of financing such as access to water, wastewater treatment, urban development in mobility, energy grid, were also discussed. While meeting with the Ministry of Finance, Druk Green Power Corporation (DGPC), andDruk Holding and Investments (DHI), we considered possible solutions with several financial products that would help spur the private sector.
What are the other areas of investment, Bhutan can leverage from EIB?
We aim to be a long-term strategic partner of Bhutan for both public and private sectors. The EIB Group can facilitate Bhutan getting in contact with private investors, and it can also support innovative corporates, from start-ups and SMEs to large enterprises, whether through the European Investment Bank or through the European Investment Fund. Here a broad range of financing solutions is possible as equity, venture debt or loans and guarantees.
In addition, the EIB can support in bringing together creative entrepreneurs from Bhutan and Europe to develop new technologies which align with the GMC’s vision of combining innovative technologies with mindfulness, care for the environment, and sustainability.
With regards to GMC, we discussed with the Chief Executive Officer of Druk Holding and Investment (DHI) on the possibility to set up a fund and identify projects for investment, as well as other avenues for venture capital. We are also interested in the agriculture sector, where Bhutan has a master plan for organic food to be sold internationally.
I want to thank wholeheartedly the Government of the Royal Kingdom of Bhutan and its Ministries for the very fruitful collaboration and their warmful welcome for my first mission to Bhutan.