Wien, 25 March 2005 Press release

Plassnik: "Austria and Bhutan as an example of a successful partnership for development"


Opening of the Basochhu large-scale hydro-electric power station

Vienna, 25 March 2005 - During her trip to Bhutan, Foreign Minister Ursula Plassnik will visit the Austrian Development Cooperation's largest project to date. Together with Prime Minister Lyonpo Yeshey Zimba, she will inaugurate the lower stage of the Basochhu hydro-electric power plant, which will cover 40% of the entire energy consumption of the Himalayan kingdom. The Bhutanese government's goal of supplying the entire country with electric power by 2020 has thus drawn a major step closer. According to Foreign Minister Plassnik, "Basochhu is a showpiece of successful development partnership. Austria is proud to accompany Bhutan on this development course."

A mountainous country, Bhutan has huge water supplies and great potential in the field of renewable energy resources, which are being exploited with Austrian support for the comprehensive electrification of the country. The underlying goal is to connect the whole country to the power supply by 2020. The Bhutanese energy policy primarily concentrates on the utilisation of hydro-electric power and the supply of the population via an electricity grid. As Austria has a great pool of knowledge and experience in the optimum utilisation of hydro-electric power, Bhutan turned to the Austrian Development Cooperation (ADC) for support in developing her energy sector . The construction of the Basochhu hydro power plant was agreed at the beginning of the 1990s, and the upper stage was opened in 2002.

While the first construction stage was mainly financed from ADC funds as a project under the Development Cooperation programme, the second stage of construction was funded as an economic cooperation project under the Austrian export promotion scheme. The ADC invested some 13 million Euro in the construction of the upper stage of Basochhu and provided consulting services worth 3.5 million Euro. Another 17 million Euro were contributed through subsidised loans (soft loans) made available by the "Österreichische Kontrollbank". After the successful completion of the upper stage in 2002, construction commenced on the lower stage of the power plant. Thanks to an export loan provided by the Austrian Ministry of Finance, Bhutan was able to fully self-finance the approx. 31 million euro investment. In this second phase of construction the ADC contributed consulting and training services to the value of approx. 1.61 million euro, thus ensuring that the power plant can be independently operated and maintained by Bhutanese personnel.

"With the construction of Basochhu, a mutually profitable economic partnership has evolved from development cooperation over the years," explained Foreign Minister Plassnik. "This is a ground-breaking model for the responsible participation of our partners in developing countries."

Bhutan, which only opened up to the external world some 40 years ago, has been a partner country of the Austrian Development Cooperation since 1989. The government of Bhutan is attempting to steer an independent development course shaped by the Buddhist world view. The Bhutanese development principle of "Gross National Happiness" centres on the wellbeing and quality of life of the people.