JBIC loan for Power Generation Project in Qatar

JBIC Signs Loan Agreement for Power Generation Project in Qatar, Supporting Japanese Firm's Overseas IPP Project and strengthening the relationship with the State of Qatar (April 27, 2007) - 1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on April 26th a loan agreement totaling up to US$836 million with Mesaieed Power Company Ltd. (MPCL) established in Qatar. The loan, co-financed with private financial institutions, was provided for financing the Mesaieed A Independent Power Producer[1] Project on the project finance[2] basis. This is the first project finance loan JBIC has extended to an infrastructure project in Qatar.

2. In the Project, MPCL, a joint venture set up by Marubeni Corp., Qatar Petroleum, and Qatar Electricity & Water Company Q.S.C., will construct a 2,000MW natural gas-fired combined-cycle thermal power plant in Mesaieed Industrial City, located to the south of Doha, and sell its power to Qatar General Electricity & Water Corporation (Kahramaa) for 25 years based on a BOT[3] scheme.

3. Demand for electric power has been increasing in Qatar due to sharp population growth and rising industrial demands including in the petrochemical sector, and it is anticipated that the electric power demand will increase by about 11% per annum by 2015. The Project will be expected to make up approximately 30% of the country's total electrical generation capacity in 2010 and play an important role as its major supply source of electricity.

4. Amid the tightening demand for natural resources across the world, it is important for Japan to strengthen its relationship with the countries with reserves of natural resources. In this regard, JBIC signed a memorandum of understanding (MOU) on comprehensive strategic partnership with Qatar Petroleum last November. This loan, which is the first project following the signing of the MOU, will contribute to the development of the power sector infrastructure in Qatar which ensures Qatar's stable economic growth. It will also deepen the overall relationship between Japan and Qatar by increasing Qatar's power generation capacity and supporting this IPP project in which a Japanese firm has participated.

*1 An independent power producer (IPP) builds and operates a power generation plant on its own and sells the electricity generated from its facilities.

*2 Project finance is a loan scheme that relies mainly on the project's cash flow as the security for repayment.

*3 A scheme in which a private company builds, operates a power plant, and transfers its ownership to the government after completion of the project period.