Project Financing for Meghnaghat Natural Gas-Fired Combined Cycle Power Plant Project in Bangladesh
Supporting Japanese Company's Participation in Power Development Project in Bangladesh under the Growth Investment Facility

• Region: Asia
• Infrastructures
• Environment
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: MAEDA Tadashi) signed on July 30 a loan agreement with Reliance Bangladesh LNG & Power Limited (RBPL) in the People's Republic of Bangladesh (Bangladesh), in which JERA Co., Inc. holds an equity stake. JBIC will provide project financing^*1 amounting up to USD265 million (JBIC portion) for the Meghnaghat Natural Gas-fired Combined Cycle Power Plant in Bangladesh, under JBIC's Growth Investment Facility^*2. The loan is co-financed with the Asian Development Bank (ADB) and private financial institutions, including Mizuho Bank, Ltd, Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd. and Société Générale S.A. The total co-financing amount is USD642 million. Nippon Export and Investment Insurance (NEXI) will provide insurance for a part of the loan provided by the private financial institutions.
     
2. In this project, RBPL will build, own and operate a 718MW natural gas-fired combined cycle power plant at Meghnaghat, located some 40 km southeast of the capital Dhaka. The electricity produced by the plant will be sold to Bangladesh Power Development Board for 22 years. This is JBIC's first project financing extended to Bangladesh.
     
3. Bangladesh is expected to see an average electricity demand increase of about 6.6% per year until 2040 on the back of strong economic growth. On the other hand, electricity supply has fallen behind demand and the country thus continues to face an electricity shortage. Under such circumstances, the Bangladesh government promotes the expansion of electricity supply including this project according to its Power System Master Plan. This loan will contribute to economic development through stable electricity supply in the country and conforms with the policy of the Bangladesh government.
     
4. In its Export Strategy for Infrastructure System revised in June 2019, 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 called for the strengthening of the international competitiveness and overseas expansion of the energy industry by promoting overseas market entry by Japanese 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.
     
5. 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 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 
   See Announcements on January 31, 2020 and May 1 , 2020.