JBIC loan to Taweelah B Power and Desalination Project in UAE

Project Financing for Taweelah B Power and Desalination Project in UAE, First Financial Support by JBIC to Country's Large Infrastructure Project (April 26, 2005)

1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed a loan agreement for the Taweelah B Power and Desalination Project with the Taweelah Asia Power Company (TAPCO), a company incorporated in Abu Dhabi, the United Arab Emirates (UAE) in which Marubeni Corporation, JGC Corporation, Abu Dhabi Water and Electricity Authority and others have equity stakes. The loan totaling an aggregate amount of US$2.2 billion was cofinanced with 15 financial institutions, including the Bank of Tokyo-Mitsubishi, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation, and the loan agreement was concluded on April 25.

2. The loan will provide long-term funds in project financing for upgrading the existing facilities of natural gas-fired combined cycle power generation and desalination plant and expanding the plant facilities at Taweelah in Abu Dhabi, UAE, as well as for selling the electricity and water produced by the plant to the Abu Dhabi Water and Electricity Company for a period of 20 years. The Project will increase the plant's total power generation capacity to 2,000 MW and total desalination capacity to 165 million gallons per day. This is the first loan that JBIC has provided for a large infrastructure project in UAE on a project financing basis.

3. Demand for power and water in Abu Dhabi is projected to grow at an annual rate of 7 percent respectively, reflecting the country's good macroeconomic conditions. To meet the projected demand growth and improve the economic efficiency and services of their supplies, the Abu Dhabi government is actively promoting IWPP power and water projects.*1 In line with this government policy, the Project is undertaken on a BOO scheme.*2 It will thereby contribute to stable power and water supplies in Abu Dhabi through utilization of natural gas as a clean energy source.

4. Japanese firms consider power and water markets in the rapidly growing Middle Eastern countries promising as a destination for their investment and are considering investments in power and water projects, including IWPP projects, in this region. This Project is the first IWPP project for both Marubeni Corporation and JGC Corporation to take on in the UAE. In particular, this is the first large overseas investment for JGC Corporation. The Project is also expected to serve as a stepping stone for broader business operations by Japanese firms in the Middle East, and JBIC intends to support their investment projects in this region.

*1 IWPP: An independent water and power producer that builds and operates power generation and water desalination plants on its own and sells the electricity and water produced by them.

*2 BOO: A scheme where a private firm builds, owns and operates a power (or other) plant on its own.