- Region: Latin America and the Caribbean
- Machinery and Equipment
- Export Loans
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The Japan Bank for International Cooperation (JBIC; Governor: Tadashi Maeda) signed on October 26 a general agreement offering an export credit line*1 with Comisión Federal de Electricidad (CFE) of Mexico, amounting up to USD60 million (JBIC's portion). The loan is co-financed by private financial institutions, bringing the total co-financing amount to USD100 million. The amount provided by the private financial institutions will be covered by insurance from Nippon Export and Investment Insurance (NEXI).
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The loan is extended to CFE, either in yen or in U.S. dollars, to finance the purchase of Japanese equipment and services necessary for power development in Mexico. JBIC has offered such loans to CFE 11 times since 1966.
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In Mexico, the power demand is expected to increase on average by 3% each year until 2031. Responding to such increase in demand, the Mexican government has been calling for private investment and pushing forward IPP projects*2 in constructing new power plants. Meanwhile, CFE, as a state-owned company responsible for power generation, transmission, and distribution in Mexico, actively engages in maintenance and upgrading of its existing power plants, and export of power generation equipment from Japanese companies to CFE is expected to continue. This loan contributes to maintaining and increasing the international competitiveness of Japanese industries by promoting export from Japan to power sector in Mexico.
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Since 2013, the Mexican government has been taking measures to reform the energy sector, including the power sector. As part of such measures, reorganization of CFE took place in January 2016. This is the first export credit line to be offered after the reorganization. JBIC will support the energy sector reform in Mexico through this loan and will further strengthen relations with CFE built over more than half a century.
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As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in exporting equipment and services to growing markets such as Mexico and expanding their businesses into those markets by drawing on its various financial instruments for structuring projects and expanding its risk-taking ability.
Note
- *1
- *2