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Project Financing for Thermal Power Generation Project in the Kingdom of Morocco
Supporting First Ultra Super Critical Coal-fired Power Plant in Africa, Participated by Japanese Company

  • Region: Africa
  • Infrastructures
  • Overseas Investment Loans
  • Project Finance

September 19, 2014
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on September 18 loan agreements, in project financing*1, totaling up to approximately USD718 million and EUR147 million (JBIC portions) respectively with Safi Energy Company S.A. (Safi), invested by Mitsui & Co., Ltd. (Mitsui), Electrabel S.A.(Electrabel), a Belgian company which is a subsidiary of French company GDF SUEZ S.A., and Nareva Holding S.A. (Nareva), a company in the Kingdom of Morocco (Morocco), for financing the Safi coal-fired power generation project. The loans are co-financed with private financial institutions including The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking Corporation, The Mizuho Bank Ltd., Sumitomo Mitsui Trust Bank, Limited*2, and Islamic Development Bank, bringing the overall co-financing amount to the equivalent of approximately USD2.107 billion*3.
     
  2. These loans are intended to finance Safi to build and operate the Ultra Super Critical Coal-fired Power Plant with a capacity of approximately 1,250 MW (625 MW x 2 units) in the city of Safi located approximately 300km South-west of Rabat, the capital of Morocco, and will sell the electricity generated by this power plant to the Office National de l'Electricité et de l'Eau Potable (off-taker) for a period of 30 years after the completion of the construction. JBIC's support for this project through these loans, will contribute to maintaining and strengthening the international competitiveness of Japanese industries.
     
  3. This is the first Ultra Super Critical Coal-fired Power Plant project for JBIC and for the Africa region. The Government of Japan claims, in the "Strategy relating Infrastructure Export and Economic Cooperation" revised June 2014, the implementation to strengthen business support and orders of the system, including designing, construction, operation and management of infrastructure by public finance, and in the "Strategic Energy Plan" revised also in June 2014, the implementation to promote the conversion of power generation facilities to high-efficiency thermal power generation which will also contribute to reducing CO2 emissions in emerging economies and developing countries. In addition, the Japanese government claims to support developing countries in the climate change sector in the "Actions for Cool Earth" (ACE) announced in November 2013. Thus, these loans are consistent with such government measures.
     
  4. The promotion of investment and trade through collaboration between the public and private sector in the African region was announced by the Government of Japan at the TICAD V, and these loans are made, under the JBIC Facility for African Investment and Trade Enhancement ("FAITH")*4, to support the promotion of private sector-led growth and the acceleration of infrastructure development in African countries. In recent years, Morocco registers an annual average rate of about 7% increase in electricity demand backed with the steady economic growth, and the project will become the important power source for Morocco*5.
     
  5. As Japan's policy-based financial institution, JBIC will continue to support overseas deployment of infrastructure business of Japanese companies and contribute to maintaining and strengthening of the international competitiveness of Japanese industries, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
Note
  1. *1 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.
  2. *2 Other private financial institutions include BNP Paribas, Crédit Agricole Corporate and Investment Bank, Société Générale S.A., Standard Chartered Bank, and local Moroccan financial institutions including Attijariwafa Bank and La Banque Centrale Populaire.
  3. *3 Nippon Export and Investment Insurance (NEXI) will provide the insurance for the part of co-financed portion by the private financial institutions.
  4. *4 See News Release on June 3, 2013.
  5. *5 JBIC signed a memorandum of understanding (MOU) on comprehensive strategic partnership with the Government of Morocco in March 2011 to enhance economic relationships in view of a potentially large business opportunity in the country. See Press Release on March 8, 2011.

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