- Region: The Middle East
- Overseas Investment Loans
- Project Finance
November 22, 2011
- The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on November 21 a loan agreement totaling up to about 697 million U.S. dollars (JBIC portion) with Phoenix Power Company S.A.O.C. (PPC) in the Sultanate of Oman for the Sur IPP Power Generation Project*2. This loan, provided in project financing,*3 is cofinanced with private financial institutions, including Mizuho Corporate Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation and The Sumitomo Trust and Banking Co., Ltd. Nippon Export and Import Insurance (NEXI) will provide Overseas Untied Loan Insurance for part of the portion financed by these private financial institutions. This is the first project financing JBIC has extended to a power infrastructure project in Oman.
- In this Project, an Omani joint venture PPC, set up by Marubeni Corporation (Marubeni), CHUBU Electric Power Co., Inc. (Chubu Electric Power), Qatar Electric and Water Company Q.S.C., and Multitech L.L.C. in Oman, will construct the country’s largest natural gas-fired combined cycle power plant with a capacity of 2,000 MW based on the BOO scheme*4 in Sur, 150 kilometers southeast of Muscat, the capital of Oman. The electricity generated in this plant will be sold to Oman Power and Water Procurement Company S.A.O.C. for a period of 15 years. In Oman, against the backdrop of the fast-growing economy, power demand is projected to increase by an annual average of more than 9% through 2017. This Project, to be completed in 2014 according to the plan, is expected to meet about one quarter of the national power demand at that time. The Project will therefore perform a substantial role as the country’s power supply source.
- JBIC launched in April this year the Enhanced Facility for Global Cooperation in Low Carbon Infrastructure and Equity Investment (E-FACE), *5 whereby announcing its policy to strengthen support for overseas integrated infrastructure system deployment and other strategic projects undertaken by Japanese firms, while vigorously mobilizing Japanese private sector funding in these areas. In this Project, Marubeni and Chubu Electric Power will perform a central role in the whole process of maintaining and operating a power plant. JBIC is thus supporting the Project as part of its efforts under E-FACE.
- The prospect of a continuously tight, global supply-demand balance of natural resources over the medium and long term has made the strengthening of ties with resource-endowed countries an increasingly important issue on Japan’s agenda. This loan will support the development of urgently needed power generation infrastructure in Oman, on which Japan relies for the import of crude oil and LNG. JBIC’s support for the Japanese firms’ IPP project will contribute to further strengthening multilayered economic relations that go beyond the linkage bound by natural resource trade.
- JBIC will continue to support Japanese firms in expanding overseas infrastructure business through project structuring and risk taking by drawing on its range of financial facilities and schemes.
- *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
- *2 An independent power producer (IPP) builds and operates a power generation facility on its own and sells the electricity generated from it.
- *3 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
- *4 BOO is a scheme in which a private company Builds, Operates and Owns a project facility such as a power plant during the contract period.
- *5 See Press Release on April 1, 2011.