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Project Finance for Facility D Natural Gas-Fired Power Generation and Desalination Project (Expansion Project) in Qatar
Supporting Japanese Company's Participation in Overseas IWPP Project as Part of QI-ESG

  • Region: The Middle East
  • Infrastructures
  • Overseas Investment Loans
  • Project Finance
November 19, 2019
  1. The Japan Bank for International Cooperation (JBIC, Governor: Tadashi Maeda) signed on November 18 a loan agreement amounting up to approximately USD194 million (JBIC portion) with Umm Al Houl Power (UHP) of Qatar, as a part of its Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth (QI-ESG) *1. The loan is provided for an expansion project for the Facility D Natural Gas-Fired Power Generation and Desalination Project*2 . The loan is to be provided through project financing*3 , co-financed with MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, the Norinchukin Bank, and KfW IPEX-Bank. The total co-financing amount is approximately USD389 million.
      
  2. UHP was established by Mitsubishi Corporation (MC) and JERA Corporation (JERA), together with Qatar Petroleum, Qatar Electricity & Water Company Q.P.S.C., and Qatar Foundation for Education, Science and Community Development. It owns a natural gas-fired combined cycle power and desalination plant that boasts a power production capacity of approximately 2,520 MW and a desalination capacity of approximately 620,000 cubic meters per day, located near Qatar Economic Zone 3, in the south of Doha, the capital of Qatar. In this project, the desalination capacity will be expanded by about 280,000 cubic meters per day and the plant will be operated on an integrated basis with the existing plant (BOOT method*4 ). It will sell the water produced to Qatar General Electricity and Water Corporation for a period of 25 years after the completion of existing plant.
      
  3. The loan is intended to support the expansion of the desalination plant in the IWPP*5 project in Qatar, in which the know-how cultivated by MC and JERA in Japan and overseas is utilized. It will contribute to maintaining and strengthening the international competitiveness of Japanese industries 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. The Japanese government, in its "Export Strategy for Infrastructure System" revised in June 2019, 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, the "Basic Energy Plan," announced in July 2018, stipulates the enhancement of international competitiveness of the energy industry and promotion of international expansion through the entry of Japanese utility companies in projects, supported by the use of policy based finances. This loan is thus in line with these government policies.
      
  5. In Qatar, the demand for water is trending upward reflecting the country's economic growth. Given such circumstance, the project is expected to play an important role as a major water supplier for the country. Moreover, Qatar is one of the world's leading producers of natural gas and is one of the key exporters of LNG to Japan. This loan will contribute to further strengthening of the multilayered economic ties between Japan and Qatar.

  6. 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 instruments for structuring projects, and by performing its risk-assuming function.

Note
  1. *1 
  2. *2 
  3. *3 
    Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.
  4. *4 
    BOOT (Build, Own, Operate, and Transfer) is a business method whereby a private company builds, owns, and operates a project facility during the term of the contract, and then transfers ownership to the public sector after project completion.
  5. *5 
    IWPP (Independent Water and Power Producer) is an independent water and power producer that constructs and operates power generation and water desalinization plants proprietarily, and sells the electricity and water produced.

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