Project Financing for Syrdarya II Natural Gas-Fired Combined Cycle Power Plant Project in Uzbekistan
Supporting Overseas Business Expansion of Japanese Companies

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

1. The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) signed on March 16 a loan agreement in project financing ^*1amounting to up to approximately USD393 million (JBIC portion) with ENERSOK Foreign Enterprise LLC (ENERSOK) in Uzbekistan, which is invested in by, inter alia, Sojitz Corporation and Kyuden International Corporation, for a natural gas-fired combined cycle power plant project. The loan is co-financed with Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, Societe Generale and the International Finance Corporation (IFC), bringing the total co-financing amount to approximately USD805 million. Nippon Export and Investment Insurance (NEXI) will provide insurance for the loan from the private financial institutions. In June 2020, JBIC signed a memorandum of understanding (MOU) with IFC to enhance cooperation between the two organizations^*2. This is the second co-financing with IFC since the signing of the MOU.
     
2. In this project, ENERSOK will build, own, and operate an approximately 1,600MW natural gas-fired combined cycle power plant in the Syrdarya region in Uzbekistan. The electricity produced by the plant will be sold to Uzbek state-owned power company JSC National Electricity Grid of Uzbekistan for a duration of 25 years.
     
3. In the Infrastructure System Overseas Promotion Strategy 2025 (supplemented in June 2022), the Government of Japan, in support of the transition to carbon neutrality and decarbonization, established the policy of providing support for quality energy and electricity infrastructure that harnesses sophisticated technologies to reduce the burden on the environment in a way that is compatible with the energy policy of the host countries. The loan is in line with this policy and will financially support an overseas infrastructure project where Japanese companies have invested and will be involved in its operation and management for a long term, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry.
     
4. In its electricity sector's roadmap toward 2050, titled A Carbon-Neutral Electricity Sector in Uzbekistan, the Government of Uzbekistan endorses the continued development of more efficient, low-carbon power-generation infrastructure, giving priority to the modernization or replacement of existing gas-fired power plants. The project will replace the aged gas-fired power plant that was built during the Soviet era with the most advanced, highly efficient combined cycle power generation plant. Supporting the project is therefore in line with the Government of Uzbekistan's energy policy. Parenthetically, the year 2022 was the 30th anniversary of the establishment of diplomatic relations between Japan and Uzbekistan.
     
5. As Japan's policy-based financial institution, JBIC will continue to provide financial support to assist Japanese companies in the overseas expansion of their infrastructure businesses toward decarbonization by drawing on its various financial facilities and schemes for structuring projects and 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 flow generated by the project.
2. *2 
   See Press Release on June 5, 2020.