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JBIC Signs Loan Agreement with ICICI
Supporting Japanese Exports of Thermal Power Generation Equipment to India

  • Region: Asia
  • Infrastructures
  • Environment
  • Export Loans
  • Untied Loans
NR/2011-4
April 1, 2011
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on March 31 a loan agreement with ICICI Bank Limited (ICICI) in India. The loan is a bank-to-bank loan to finance the export of thermal power generation boiler/steam turbine sets to India.

    • In this project, two joint venture companies*2 established primarily by Larsen & Toubro Limited (L&T), one of the largest construction and heavy machinery manufacturing companies in India, and Mitsubishi Heavy Industries, Ltd. (MHI), fabricate supercritical pressure boiler/turbine sets (manufactured by MHI and exported by Marubeni Corporation) and sell them to Jaiprakash Power Ventures Limited (JPVL),*3 an Indian corporation constructing and operating a supercritical pressure coal-fired thermal power plant in Nigrie in the state of Madhya Pradesh. JBIC's export financing, which reached the aggregate amount of 15.3 billion yen, was co-financed with the Bank of Tokyo-Mitsubishi UFJ, Ltd(lead arranger). This will finance, by way of ICICI, JPVL's purchase of  boilers and steam turbine/generators.
    • The sustained fast-paced growth in the Indian economy in recent years has increased power demand. The Indian power supply, however, lags behind demand growth, causing chronic power shortages. Eliminating this bottleneck in power generation infrastructure is an urgent issue for businesses including Japanese affiliates and subsidiaries operating in the Indian market. The Eleventh Five-Year Plan drawn up by the Indian government intends to greatly expand capacity in the power sector. There are particularly growing expectations for supercritical pressure coal-fired thermal power generation, which can both supply stable power by making use of the country's abundant coal resources and decrease burdens on the environment.
    • Under these circumstances, many Japanese firms, not to mention MHI, have entered the Indian power market by using their advanced technologies. This loan supports these Japanese firms' efforts to capture overseas infrastructure business opportunities.
     
  2. ICICI is the second largest private-sector bank in India, with extensive business transactions with a number of the country's leading firms, and is involved in many domestic infrastructure projects. To date, JBIC and ICICI have developed close cooperative ties through the funding of supporting industries dealing with Japanese affiliates and subsidiaries operating in India; the progress in CDM projects; and trade financing to uphold trade amid the global financial crisis. Collaboration with a domestic Indian bank enabled by this loan is expected to further advance effective cooperation between Japanese firms entering India and local businesses, and serve to identify and formulate promising projects from earlier stages.
     
  3. JBIC is committed to continue steady support for Japanese business development in as well as exports to India's fast growing markets.
     
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 L&T-MHI Boilers Private Limited (LTMB) and L&T-MHI Turbine Generators Private Limited (LTMT) were both incorporated in India. JBIC provided loans for their manufacture of production facilities in July 2009. See Press Release on July 28, 2009.
  3. *3 A power company affiliated with the Jaypee Group, an Indian conglomerate whose business encompasses various industries including cement, real estate and power generation.

 

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