Project Financing for Gulf SRC Gas-Fired Combined Cycle Power Plant Project in Thailand
Supporting Japanese Company's Participation in IPP Project in Thailand as part of Promoting Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth
- Region: Asia
- Overseas Investment Loans
- Project Finance
- The Japan Bank for International Cooperation (JBIC; Governor: Tadashi Maeda) signed on November 2, a loan agreement with Gulf SRC Company Limited (GSRC) of Thailand, in which Mitsui & Co., Ltd., holds an equity stake. JBIC will provide project financing*1 amounting up to approximately USD227 million (JBIC portion) for Gulf SRC Gas-Fired Combined Cycle Power Plant Project in Thailand, as part of JBIC's Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG*2). The loan is co-financed with the Asian Development Bank (ADB), Export-Import Bank of Thailand (EXIM Thailand), Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, as well as regional banks in Thailand*3, with an overall co-financing amount of approximately USD1,299 million.
In this project, GSRC will construct, own and operate a 2,500MW Gas-Fired Combined Cycle Power Plant (four generating units of 625MW each) located in the Hemaraj industrial park which extends from Chonburi Province to Rayong Province, in the east of Thailand. The electricity produced by these facilities will be sold to the Electricity Generating Authority of Thailand for a period of 25 years.
In its Export Strategy for Infrastructure System revised in June 2018, the Japanese government expressed its intention to promote expanding orders for infrastructure systems, including the design, construction, operation and management of infrastructure, as well as increasing investments in local businesses. The government also announced its "overseas deployment strategy for the power sector" in October 2017, emphasizing overseas power generation business implemented by Japanese trading companies as a priority area in its policy. This overseas strategy states that the government will provide support for overseas power development projects through JBIC's financial instruments. This loan, therefore, is in line with these policies of the government as it will contribute to Japanese industry maintaining and enhancing its international competitiveness by financially supporting those Japanese companies that invest in overseas infrastructure projects as well as operate and manage these facilities on a long-term basis.
According to the power development plan of the Thai government, the country's demand for electricity is projected to grow by an annual average of approximately 3.9％ until 2036, and this project is considered to be a part of the major base load. It will supply the energy necessary for the Thailand 4.0 initiative and the Eastern Economic Corridor Plan, which are key parts of the government's economic policy. The project is also significant for Japanese firms operating in Thailand, from the point of view of ensuring a stable supply of electricity. As such, the project will not only contribute to infrastructure development in Thailand, but it will also contribute to overseas economic activities of Japanese firms.
As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in expanding overseas infrastructure businesses by drawing on its various financial facilities and schemes for structuring projects, and by performing its risk-assuming function.
Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
JBIC launched, on July 1, 2018, its Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG). The Facility aims to provide a wide range of financing support for infrastructure development which is expected to help to preserve the global environment, including projects in the energy conservation field. See Announcement on June 28, 2018.
These banks include the following, all in Thailand: The Siam Commercial Bank Public Company Limited, Bangkok Bank Public Company Limited, Bank of Ayudhya Public Company Limited, TMB Bank Public Company Limited, CIMB Thai Bank Public Company Limited, Land and Houses Bank Public Company Limited, and Industrial and Commercial Bank of China (Thai) Public Company Limited.