JBIC Provides First Project Finance for Solar Power Generation Project in India
Supporting Japanese Companies' Participation in Solar Power Generation Business
- Area: Asia
- [Project Finance]
- Overseas Investment Loans
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed, on September 11, 2017, a loan agreement for project finance*1
with SBG Cleantech ProjectCo Private Limited ("SBG Cleantech"), an Indian corporation in which SoftBank Group Corp. ("SBG") has an equity stake, for a solar power generation project in India. The loan is co-financed with Mizuho Bank, Ltd. and a portion of the loan provided by Mizuho Bank, Ltd. will be insured by Nippon Export and Investment Insurance (NEXI).
Under this project, SBG Cleantech will construct, own and operate a solar power generation plant with a total generation capacity of 350MW at the solar park to be built in Kurnool district, the state of Andhra Pradesh in the south of India. SBG Cleantech also sells the generated electricity to NTPC Limited, India's state-owned power generation company, for 25 years.
In India, electricity demand is rapidly increasing on the back of faster economic growth in recent years. This project is the first overseas solar power generation project invested by SBG. Through providing funding support to this project, JBIC will contribute to maintaining and increasing the global competitiveness of Japanese companies, as well as to curbing greenhouse gas emissions in India.
The government of India launched the Jawaharlal Nehru National Solar Mission, a major initiative to promote solar power generation, for developing 100GW solar power capacity by 2022, with an aim to secure a stable power supply capability and diversify electricity power sources. This project has started operating under the government's solar power initiative. On September 1, 2014, Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi announced the "Japan-India Investment Promotion Partnership" under which Japan will provide JPY3.5 trillion of public and private financing to India over the next five years. This project is also in line with the objectives of the initiatives undertaken by both governments.
- In response to those initiatives between Japan and India, JBIC has made efforts to increase investment opportunities for Japanese companies, by conducting discussions with the government of India twice since May 2016 in order to promote Japanese investments in the electricity power generation business in India. This project is the first project that has been realized afterthese efforts under the bilateral strategic partnership between the two countries.
- As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in developing overseas businesses, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
- *1 Project finance is a structured finance scheme in which repayments for a loan are made solely from the cash flows generated by the project.