Project Financing for Solar PV Project for Kingdom of Saudi Arabia
Supporting Overseas Business Development of Japanese Companies
- Region: The Middle East
- Overseas Investment Loans
- Project Finance
The Japan Bank for International Cooperation (JBIC; Governor: MAEDA Tadashi) signed on March 19 a loan agreement with South Rabigh Renewable Energy Company (SRREC) of the Kingdom of Saudi Arabia (Saudi Arabia), in which Marubeni Corporation holds an equity stake. JBIC will provide project financing*1
amounting to up to approximately USD78 million (JBIC portion) for the Rabigh Solar PV Plant located in Saudi Arabia. The loan is co-financed with Mizuho Bank, Ltd and Al Rajhi Banking & Investment Corporation of Saudi Arabia, and the total co-financing amount is approximately USD157 million. Al Rajhi Banking & Investment Corporation plans to provide the funds based on Islamic finance.
In this project, SRREC, which was established by Marubeni Corporation together with Al Jomaih Energy & Water Company of Saudi Arabia, will build, own and operate a 300MW solar PV plant in Rabigh, located approximately 800km to the west of Riyad, the capital of Saudi Arabia. The electricity produced by the plant will be sold to Saudi Power Procurement Company over 25 years. This is the first loan by JBIC for an independent power producer (IPP)*2
project as well as for a renewable energy project in Saudi Arabia.
In its Infrastructure System Overseas Promotion Strategy 2025 issued in December 2020, the Japanese government expressed its intention to support Japanese companies with technological superiority towards global energy transition and decarbonization. This loan is in line with these government policies, as it will contribute towards Japanese industry maintaining and enhancing its international competitiveness by financially supporting Japanese companies that invest in overseas infrastructure projects as well as operate and manage such facilities on a long-term basis.
The Government of Saudi Arabia announced the National Industrial Development and Logistic Program in January 2019 as part of the Saudi Vision 2030, and aims to develop 40GW of solar power generation and 16GW of wind power generation capability by 2030. This project therefore aligns with the Saudi Arabian government’s energy policy. Moreover, Saudi Arabia is one of the world's leading producers of oil and natural gas and is a key exporter of oil to Japan. The loan is expected to contribute toward further strengthening the multilayered economic ties that exist between the two countries.
- As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in developing their overseas infrastructure businesses by drawing on its various financial instruments and schemes for structuring projects as well as performing its risk-assuming function.
Project finance is a financing scheme in which repayments for a loan are made solely from cash flows generated by the project.
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.