- Region: The Middle East
- Infrastructures
- Environment
- Overseas Investment Loans
- Project Finance
-
The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) signed on October 23, 2024 loan agreements in project financing*1 amounting up to approximately USD148 million (JBIC portion) with RIAH AL-GHAT FOR ENERGY COMPANY (AL-GHAT) for the Al-Ghat onshore wind farm project, and approximately USD136 million (JBIC portion) with WAAD AL SHAMAL FOR ENERGY COMPANY (WAAD AL SHAMAL) for the Waad Al Shamal onshore wind farm project. Both companies are based in the Kingdom of Saudi Arabia and invested in by Marubeni Corporation and Abdul Aziz Al Ajlan Sons Co. for Commercial and Real Estate Investment – Ajlan & Bros. The loans are co-financed with Sumitomo Mitsui Trust Bank Limited, Standard Chartered Bank Limited, and Commercial Bank of Dubai PSC, bringing the total co-financing amounts to approximately USD298 million and approximately USD274 million, respectively.
-
In the Al-Ghat project, AL-GHAT will build, own, and operate a 600 MW onshore wind farm in Al-Ghat, Riyadh Province. In the Waad Al Shamal project, WAAD AL SHAMAL will build, own, and operate a 500 MW onshore wind farm in Turaif, Northern Borders Province. Both companies will sell the electricity generated by the wind farms to Saudi Power Procurement Company (SPPC) acting as the off-taker in the electricity sector through a Power Purchase Agreement (PPA) for a duration of 25 years. These loans, extended by JBIC for independent power producer (IPP*2) projects and renewable energy projects in Saudi Arabia, follow the loan provided for the Rabigh solar power generation project*3.
-
In the Infrastructure System Overseas Promotion Strategy 2025, supplemented in June 2023, the government of Japan, in its support of the transition to net-zero and decarbonization, has established a 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 host countries. In addition, in the outline of a new strategy looking ahead to 2030, which was approved in June 2024 by the Ministerial Meeting on Strategy relating to Infrastructure Export and Economic Cooperation, the Government aims to respond flexibly by taking social changes, such as green transformation (GX) and digital transformation (DX), as opportunities. The loans are in line with these policies and will financially support overseas infrastructure projects that the Japanese company has invested in and will be involved in the operation and management for the long term, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry.
-
These projects are part of the National Renewable Energy Program (NREP), which is supervised by the Ministry of Energy of Saudi Arabia, aiming to achieve an optimal energy mix for electricity production by having gas and renewable energy at approximately 50% each by 2030 and reduce dependence on liquid fuels in electricity generation in line with Saudi Vision 2030. Moreover, Saudi Arabia is one of the world's leading producers of oil and natural gas, and it is a key exporter of oil to Japan. The loans are 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.
Note
- *1
Project finance is a financing scheme in which repayments for a loan are made solely from cash flows generated by the project.
- *2
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.
- *3