Loan for India's National Thermal Power Company
Loan for Large-scale Infrastructure Project
- Area: Asia
- Machinery and Equipment
- Export Loans
The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on January 25, upon the Prime Minister of Japan Shinzo Abe's visit in India, a loan agreement with two facilities amounting up to approximately 155 million U.S. dollars, (JBIC portion) and approximately 55 million U.S. dollars (JBIC portion), respectively with the NTPC Limited ("NTPC"). The loans are cofinanced with the Sumitomo Mitsui Banking Corporation and the total amount of cofinancing for each facility is approximately 259 million U.S. dollars and 91 million U.S. dollars, respectively.*1
These loans are intended to finance the NTPC to purchase, from Toshiba JSW Power Systems Private Limited, which is a local subsidiary of the Toshiba Corporation (TJPS) in India, Toshiba Corporation (Toshiba) and Ebara Corporation (Ebara), steam turbine generators (produced by TJPS and partially by Toshiba), and boiler feed water pumps (produced by Ebara) in order to construct supercritical coal-fired power plants (3×800MW) in the Kudgi district of the Karnataka state in southern India.
The Indian economy has continued to grow quickly in recent years, and chronic power shortages on the back of increasing power demand is a big problem for Japanese companies deploying their businesses in India.*2
Given the circumstance, the government of India set a high priority on the development of power supply and plans a large-scale electricity facilities reinforcement under the 12th
five-year economic plan (2012-2017). Therefore, the construction of a large number of new power plant and rehabilitation projects for existing power plants are expected to be carried out in the country.
NTPC, established in 1975, is India's largest power company. The capacity of its power generating facilities accounts for 16% of the whole country, and the amount of power generated by them makes up 25% of the total power generated. NTPC is also one of the major companies in Asia. As the largest power company in India, NTPC is expected to play an important role in power facility enhancement within the 12th
five-year economic plan. Under the situation where the construction of several new power plants is planned for the future, an expectation for the expansion of business opportunities is also increasing for Japanese companies, which possess a high level of technology. In such a situation, these loans, which JBIC provides comprehensive support for infrastructure business deployment by Japanese companies, will support Japanese companies for winning orders and expanding sales, thereby contributing to maintaining and improving the international competitiveness of the Japanese industry. In addition, it is expected that various cooperation between NTPC and Japanese companies in the power infrastructure area will be further deepened by strengthening the relationship between JBIC and NTPC through these loans. JBIC have provided TJPS with a loan for their construction of manufacturing plants and other relevant funds.*3
Therefore, this time, JBIC is providing multi-faceted support for the overseas business of a Japanese company through making a loan for the sale of the turbine equipment produced in TJPS's manufacturing plant mentioned above.
As Japan's policy-based financial institution, JBIC will continue to support the Japanese companies'overseas business deployment and export of Japanese infrastructure system to India as well as opportunities for Japanese companies to participate in the country's business projects by drawing on its financial facilities and schemes for structuring projects and performing its risk-assuming function.
- *1 Nippon Export and Investment Insurance (NEXI) will provide Buyer's Credit Insurance and Overseas Untied Loan Insurance for the portion cofinanced by Sumitomo Mitsui Banking Corporation.
- *2 According to the “FY2013 Survey (the 25th) Report on Overseas Business Operations by Japanese Manufacturing Companies” conducted by JBIC, approximately 60% of the Japanese companies running projects in India indicated problems with power infrastructure in the country. For the detail, please see press release on 29 November 2013.
- *3 See press release on 22 October 2009.