Buyer's Credit for National Power Company of Iceland
Supporting Export of Facilities for Geothermal Power Generation Plant by Japanese Company through JBIC's First Financing to Icelandic Company
- Area: Europe
- Export Loans
The Japan Bank for International Cooperation (JBIC; Governor, CEO: Hiroshi Watanabe) signed on December 11 a buyer's credit agreement (export loan) totaling up to approximately USD34 million (JBIC portion) with Landsvirkjun (LV), the largest power company in the Republic of Iceland (Iceland). The loan is cofinanced with Citibank Japan Ltd. (lead arranger), The Bank of Yokohama, Ltd., and Commerzbank AG, Tokyo Branch, bringing the total cofinancing amount to approximately USD68 million, with Nippon Export and Investment Insurance (NEXI) providing insurance for the portion cofinanced by the private financial institutions.
The loan is intended to provide financing for LV to purchase machinery and equipment related to geothermal power generation from FUJI ELECTRIC CO., LTD. and other companies for the construction of a new geothermal power station (installed capacity: 90 MW) in Theistareykir, northeast Iceland. This loan marks JBIC's first financing provided to a company in Iceland.
Presented as an example of "Quality Infrastructure Investment" which is promoted by the Japanese government, this loan contributes to maintaining and strengthening the international competitiveness of Japanese industries in the renewable energy sector. The project is also expected to further enhance the wide range of cooperation in the power infrastructure sector between Japanese companies and LV, which owns hydro, geothermal, and wind power generation facilities, as well as a majority in the transmission grid, and generates about 70% of Iceland's electricity.
Iceland supplies most of its domestic electricity by renewable energy, using its abundant sources. Furthermore, with its competitive-cost power supplies, the country actively attracts foreign enterprises in power-intensive industries which have become Iceland's key industries, such as aluminum smelting. Amid the global demand for greenhouse gas reduction in consideration of climate change, LV is planning to continue the construction of geothermal power stations in the future. Such a trend is expected to increase business opportunities for Japanese companies who boast advanced technologies, as well as an approximately 70% world market share of turbines for geothermal power generation.
As Japan's policy-based financial institution, JBIC will continue to financially support the creation of opportunities for Japanese companies to export their infrastructure-related facilities and participate in local projects, such as in Iceland, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.