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Project Financing for Hamriyah Natural Gas-fired Combined Cycle Power Plant in the Emirate of Sharjah, UAE
Supporting Sharjah's first IPP project under JBIC's global facility for QI-ESG

  • Region: The Middle East
  • Infrastructures
  • Environment
  • Overseas Investment Loans
  • Project Finance
April 1, 2019
  1. The Japan Bank for International Cooperation (JBIC; Governor: Tadashi Maeda) signed on March 31, a loan agreement with Sharjah Hamriyah Independent Power Company PJSC (SHIPCO) in the United Arab Emirates (UAE), in which Sumitomo Corporation and Shikoku Electric Power Company, Incorporated hold an equity stake. JBIC will provide project financing*1 amounting up to approximately USD555 million (JBIC portion) for the Hamriyah Gas-fired Combined Cycle Power Plant located in the Emirate of Sharjah (Sharjah), UAE, under JBIC's Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG) *2. The loan is co-financed with private financial institutions, including Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, The Norinchukin Bank, Société Générale S.A., and Standard Chartered Bank. The total co-financing amount is approximately USD1,129 million. The portion of the loan provided by the private financial institutions is partly covered by Nippon Export and Investment Insurance (NEXI).
      
  2. In this project, SHIPCO will build, own and operate a 1,800MW (three 600MW units) gas-fired combined cycle power plant located in Hamriyah, Sharjah. The electricity produced by the plant will be sold to the Sharjah Electricity and Water Authority for 23-and-a-half years. This project will be Sharjah's first independent power producer (IPP) *3 project.  
      
  3. 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. In addition, in the Strategic Energy Plan released in July 2018, the government is calling for the strengthening of the international competitiveness and overseas expansion of the energy industry by promoting the market entry by Japanese utility companies, with support from financing from policy-based financial institutions. This loan 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.
      
  4. While demand for electricity is expected to continue to expand in Sharjah, the Emirate imports about 50% of its power requirement from the Emirate of Abu Dhabi. The remainder is currently being generated by low-efficiency older power stations in Sharjah. The project is therefore aligned with the electricity policy of Sharjah, which promotes construction of large-scale, highly-efficient combined cycle power plants as a major source of electricity supply.
      
  5. This project, which will introduce gas turbines manufactured by General Electric Company, was specifically noted as one of "U.S.-Japan Infrastructure Cooperative Activities" in the joint statement of the Second Public-Private Sector Roundtable Discussion on U.S.-Japan Cooperation on Third Country Infrastructure held on April 23, 2018.
      
  6. As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in exporting their infrastructure-related technology and expertise in collaboration with private-sector banks by drawing on its various financial tools and schemes as well as by performing its risk-assuming function.
      
Note
  1. *1 
     Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
  2. *2 
  3. *3 
    An IPP (Independent Power Producer) is an independent producer of electric power who builds and operates power facilities, and generates electric power available for sale.

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