- Region: The Middle East
- Infrastructures
- Environment
- Overseas Investment Loans
- Project Finance
December 18, 2007
- Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed on December 17 finance documents with Abu Dhabi Water & Electricity Authority(ADWEA) and Marubeni Corp. regarding a loan for the Fujairah F2 Power and Desalination Project. The signing ceremony took place, graced by the attendance of H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Force, and Prime Minister Yasuo Fukuda. The loan totaling up to approximately US$1,336 million on the part of JBIC, provided on a project finance basis,*1 was co-financed with financial institutions including Sumitomo Mitsui Banking Corporation (SMBC). This is the first project finance loan for JBIC in the Emirate of Fujairah, a constituting member of the UAE.*2
- In the Project, Fujairah Asia Power Company(FAPCO), a joint venture set up by Marubeni Corp., International Power, plc, a British power producer, and ADWEA, will construct a 2,000MW natural gas-fired combined-cycle thermal power plant and a desalination plant with the capacity to produce 130 million imperial gallons of desalinated water per day in Qidfa, a town 20km north of the capital city of the Emirate of Fujairah in the UAE, and will sell its electric power and water to the Abu Dhabi Water & Electricity Company for a period of 20 years based on a BOO scheme.*3
- With its high economic growth rate of over 10% per year, the Emirate of Abu Dhabi, which accounts for about 60% of GDP and over 30% of the population of the UAE, is projecting that its demand for electricity and water will respectively grow by 12% and 4% annually until 2015. This Project will provide about 17% of the total power and about 16% of the total water supplies of the Emirate of Abu Dhabi in 2010, thus being expected to play an important role as a major source of electric power and water for the Emirate of Abu Dhabi.
- Amid tight supply of natural resources across the world, it has become increasingly important for Japan to strengthen relations with resource-endowed countries. This loan will support the development of urgently needed infrastructure in the UAE, the country on which Japan relies for 25% of its total crude oil imports. JBIC's support for an independent water and power producer (IWPP) *4 project participated in by a Japanese firm in the UAE will also contribute to building multi-layered economic relations beyond a relationship focused on petroleum between the two countries, as mentioned by the former Prime Minster Abe during his official visit to the UAE in April 2007.
- JBIC intends to contribute towards further strengthening the economic relationship between the two countries and to support Japanese companies' business development in the Middle East by facilitating effective project formation and utilizing its risk-taking function.
- *1 Project finance is a loan scheme that relies primarily on the cash flow generated by the project as the security for repayment.
- *2 This is also the second loan provided by JBIC on the project finance basis for an infrastructure project in the UAE, following the Taweelah B Power and Desalination Project (loan agreement signed on April 2005).
- *3 BOO is a scheme where a private firm builds, owns and operates a power or other plant on its own.
- *4 An independent water and power producer (IWPP) builds and operates power generation and water desalination plants on its own and sells the electricity and water generated by them.