Project Finance for Facility D Natural Gas-Fired Power Generation and Desalination Project in Qatar
Supporting Japanese companies' participation in overseas IWPP project
- Area: The Middle East
- [Project Finance]
- Overseas Investment Loans
The Japan Bank for International Cooperation (JBIC; Governor, CEO: Hiroshi Watanabe) signed on January 13 a loan agreement amounting up to approximately USD1,269 million (JBIC portion) with Umm Al Houl Power (UHP) of Qatar for the Facility D IWPP*1
project. The loan is, provided in project financing*2
, cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Mitsubishi UFJ Trust and Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, the Norinchukin Bank, Qatar National Bank, and KfW IPEX-Bank, with a total cofinancing amount of approximately USD2,538 million.
UHP was established by Mitsubishi Corporation (MC) and Tokyo Electric Power Company, Incorporated (TEPCO) together with Qatar Petroleum, Qatar Electricity & Water Company Q.S.C., and Qatar Foundation for Education, Science and Community Development. This project involves construction, ownership, and operation of a natural gas-fired combined cycle power plant (capacity: approximately 2,400 MW) and a desalination plant (capacity: approximately 590 thousand cubic meters per day) in the vicinity of Qatar Economic Zone 3, located south of the capital Doha, on the BOOT*3
basis. The electricity and water generated under the project will be sold to Qatar General Electricity and Water Corporation for 25 years after the completion of the plants.
The loan is intended to support the IWPP project in Qatar leveraging the know-how cultivated by MC and TEPCO in Japan and overseas, and will contribute to maintaining and strengthening the international competitiveness of Japanese industries. The support of the project is also in line with the "Infrastructure Systems Export Strategy" revised in June 2015, in which the Japanese government announces the expansion of systems orders encompassing the design, construction, operation, and management of infrastructure, as well as of local project investments.
Demand for electric power and water has been increasing in Qatar due to rapid population growth and economic development, and thus the project is expected to play an important role as its major supply source of electricity and water. Qatar also possesses one of the largest natural gas reserves in the world, making the country one of the most important LNG suppliers for Japan. This loan will thereby contribute to further strengthening the multilayered economic relationship between the two nations.
As Japan's policy-based financial institution, JBIC will continue to support the overseas infrastructure project development of Japanese companies and the further enhancement of bilateral economic relations, by drawing on its various financial facilities and programs for structuring projects and performing its risk-assuming function.
- *1 IWPP (Independent Water and Power Producer) is a form of an independent water and power producer builds and operates power generation and water desalinization plants on its own, and sells the electricity and water produced from them.
- *2 Project finance is a financial structure in which repayments for a loan provided for a project are made exclusively from the cash flows generated by the project, while security for the loan is limited to the project assets.
- *3 BOOT (Build, Own, Operate, and Transfer) is a form of financing program in which a private company builds, owns, and operates the project facility during the contract term, and then transfers ownership to the public sector after the project completion.