Buyer's Credit for Jorf Lasfar Power Project in Morocco Supporting JBIC’s First Project Financing in Morocco
International Business Development NR/2012-18
June 21, 2012
June 21, 2012
- The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed today a buyer's credit*1 agreement totaling up to 216 million U.S. dollars (JBIC portion) with Jorf Lasfar Energy Company 5 & 6 S.A. (JLEC 5&6) in the Kingdom of Morocco (Morocco). *2 The loan is provided in project financing*3 and cofinanced with Tokyo branches of BNP Paribas Bank (leading agent), Standard Chartered Bank and Societe Generale Bank. The total cofinancing amounts to about 360 million U.S. dollars. Nippon Export and Investment Insurance (NEXI) provides Buyer's Credit Insurance for the cofinanced portion. This loan is the first extended project finance loan by JBIC to Morocco.
- In this Project, Abu Dhabi National Energy Company P.J.S.C. (TAQA), a subsidiary of Abu Dhabi Water and Electricity Authority (ADWEA), which is wholly owned by the Government of the Emirate of Abu Dhabi, will construct a new coal-fired power plant with a capacity of 700 MW (350 MW × 2 units) in the adjoining compounds of the currently operating coal-fired power plant with a capacity of 1,356 MW in the Jorf Lasfar district in southwest of Casablanca, and JLEC 5&6, in which TAQA has equity stakes, will sell the electricity generated by this new power plant to the Office National de l'Electricité et de l’Eau Potable (off-taker) for a period of 30 years. This loan will fund part of the construction cost of this power plant whose order was awarded to a consortium in which MITSUI & CO., LTD. participated. (The steam turbine and boiler, the principal components of the plant, are manufactured, by Mitsubishi Heavy Industries, Ltd. and IHI Corporation, respectively.)
- Against the backdrop of economic growth and expanding electrification of the areas without access to electricity, it has been projected in recent years that demand for electric power in Morocco will continue to grow at an annual average rate of 7%. This Project will meet about 10% of the country's demand for electric power in 2014 when it is planned to be completed, and the plant is expected to perform a substantial role as the country's electricity supply source.
- JBIC's support for the export of the machinery and the equipment for the power station by Japanese firms in this Project contributes to create business opportunities for them in Morocco where demand for electricity is expected to increase in the years to come. Thus, it will serve to maintain and improve the international competitiveness of Japanese industries. Another point worth noting is that this is a power generation project in a third country being undertaken by the Abu Dhabi government through TAQA. As Abu Dhabi is a very important energy resource supplier to Japan, this loan will contribute to further strengthening multi-layered economic relations between Japan and Abu Dhabi.
- The Government of Japan pledged in its statement during the Fourth Tokyo International Conference on African Development (TICAD IV) held in May 2008 that JBIC would provide financial support totaling up to 2.5 billion U.S. dollars to Africa over a 5–year period. This loan will serve toward this pledge. JBIC will continue to support overseas infrastructure deployment by Japanese firms by drawing on its various financial facilities and schemes for structuring projects and performing risk-assuming functions.
- *1 A buyer's credit is direct loan to a foreign importer (buyer) to finance the import of machinery and equipment or the utilization of Japanese technical services from Japanese firms.
- *2 JBIC signed a memorandum of understanding (MOU) on comprehensive strategic partnership with the Government of Morocco in March 2011 to enhance economic relationship in view of a potentially large business opportunity in the country. See Press Release on March 8, 2011.
- *3 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.