Buyer's credit to India's National Thermal Power Company
Supporting Export of Equipment Related to Thermal Power Plants by Japanese Companies
- Region: Asia
- Machinery and Equipment
- Export Loans
The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on January 25, upon the Prime Minister of Japan Shinzo Abe's visit in India, a loan agreement amounting up to approximately 4.8 billion yen (JBIC portion) with the NTPC Limited (“NTPC”). The loans are cofinanced with the Sumitomo Mitsui Banking Corporation and the total amount of cofinancing is approximately 8 billion yen.*1
The purpose of this loan is to provide funds for the NTPC to purchase gas turbines and control systems (produced by Mitsubishi Heavy Industries Ltd. (MHI)) from the Marubeni Corporation, and MHI, in for the renovation and modernisation project at a gas combined-cycle power plant (facility capacity of 663.36MW) in the Auraiya district of the Uttar Pradesh Province in northern India.
The Indian economy has continued to grow quickly in recent years, and chronic power shortages on the back of increasing power demand is a big problem for Japanese companies deploying their businesses in India.*2
Given the circumstance, the government of India set a high priority on the development of power supply and plans a large-scale electricity facilities reinforcement under the 12th
five-year economic plan (2012-2017). Therefore, the construction of a large number of new power plant and rehabilitation projects for existing power plants are expected to be carried out in the country.
NTPC, established in 1975, is India's largest power company. The capacity of its power generating facilities accounts for 16% of the whole country, and the amount of power generated by them makes up 25% of the total power generated. NTPC is also one of the major companies in Asia. As the largest power company in India, NTPC is expected to play an important role in power facility enhancement within the 12th five-year economic plan. Under the situation where the construction of several new power plants is planned for the future, an expectation for the expansion of business opportunities is also increasing for Japanese companies, which possess a high level of technology. This loan aims to contribute to maintaining and improving the international competitiveness of Japanese industries through export to India by Japanese companies. It is also expected that various cooperation between NTPC and Japanese companies in the area of power infrastructure will be further deepened by strengthening the relationship between JBIC and NTPC through this loan.
As Japan's policy-based financial institution, JBIC will continue to support the Japanese companies' overseas business deployment and export of Japanese infrastructure system to India as well as opportunities for Japanese companies to participate in the country's business projects by drawing on its financial facilities and schemes for structuring projects and performing its risk-assuming function.
- *1 Nippon Export and Investment Insurance (NEXI) will provide Buyer's Credit Insurance and Overseas Untied Loan Insurance for the portion cofinanced by Sumitomo Mitsui Banking Corporation.
- *2 According to the "FY2013 Survey (the 25th) Report on Overseas Business Operations by Japanese Manufacturing Companies" conducted by JBIC, approximately 60% of the Japanese companies running projects in India indicated problems with power infrastructure in the country. For the detail, please see press release on 29 November 2013.