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JBIC Signs Loan Agreement for the Al Hidd Independent Water and Power Producer Project in Bahrain
First Loan Provided by JBIC for Project Financing in Bahrain

  • Region: The Middle East
  • Infrastructures
  • Environment
  • Overseas Investment Loans
  • Project Finance
NR/2006-6
April 5, 2006
  1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a loan agreement on April 4 totaling up to US$1 billion in project financing*1 for the Al Hidd Independent Water and Power Producer Project. The loan agreement is with Hidd Power Company B.S.C.(c), a corporation of the Kingdom of Bahrain, and is cofinanced with six financial institutions (including Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation).
     
  2. Under the project, Hidd Power Company B.S.C.(c), which was established by equity participation by Sumitomo Corporation, International Power Plc, a British power producer, and Suez Tractebel S.A., a Belgian energy infrastructure company, will purchase an existing power generation and desalination plant (power generation capacity: 965MW, desalination capacity: 30 million gallons/day) from the Ministry of Electricity and Water of the Kingdom of Bahrain. The plant is located in the Al Hidd district, 20 kilometers east of Manama, the capital city of Bahrain.  Hidd Power Company B.S.C.(c) will also construct a new desalination plant (capacity: 60 million gallons/day) to sell electric power and water to the Ministry of Electricity and Water for a period of 20 years through the BOO scheme.*2 This is the first loan that JBIC has extended in project financing for a project in Bahrain.
     
  3. For the Middle Eastern countries, meeting the growing needs of electric power and water is an important policy agenda, since these are two of the most essential infrastructure sectors for the achievement of economic growth.  Japanese companies thus consider the electric power and water market in this region to be a promising destination for investment and have been strengthening business activities there.  This is the first IWPP project*3 that Japanese companies have undertaken in Bahrain, and JBIC financially supports their efforts.
     
  4. Amid the tightening demand for energy resources across the world Japan, which is dependent on imports from the Middle East for some 70% of its crude oil, is increasingly urged to ensure stable political and economic conditions in the Middle East, as well as to strengthen ties with countries in the region.  This loan will financially support efforts to effectively develop and manage infrastructure by banking on the private-sector vitality in Bahrain, a country which is taking a leading role in stabilizing political and economic conditions as well as democratization in the region.  The loan will thereby contribute to economic growth in Bahrain and will help cement Japan-Bahrain ties.  Taking advantage of its status as an official financial institution, JBIC intends to support Japanese companies' business development in the Middle East by facilitating effective project formation and utilizing its risk-taking function. 

     
  1. *1 Project financing is a loan scheme that relies mainly on the project's cash flow as the security for repayment.
  2. *2 A scheme in which a private company builds, owns, and operates the project facility, including a power generation plant.
  3. *3 An IWPP (Independent Water and Power Producer) builds and operates power generation and water desalination plants on its own, selling the electricity and water produced by them.

 

 

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