Republic of Iraq / Loan Insurance for MOE Substation Construction Project
Nippon Export and Investment Insurance
Nippon Export and Investment Insurance (NEXI) has decided to provide insurance for commercial bank loans to the Ministry of Finance of Republic of Iraq, which will be used for construction of electrical substations. The Iraqi Ministry of Electricity (MOE) is planning to build four fixed substations and twelve mobile substations within Iraq.
In the Joint Statement made in November 2011 by the Prime Ministers of both Japan and Iraq, the two governments referred to a financial scheme for projects in Iraq. The MOE substation construction project is the first project supported by this financial scheme. Also, this is the first time that NEXI has provided a loan insurance to support an Iraqi project.
Toyota Tsusho Corporation has been awarded an EPC contract for the project, in which Toshiba Corporation will deliver main equipment for the fixed substations and Meidensha Corporation will provide mobile substation facilities. The operation is scheduled to start in 2021. Japan Bank for International Cooperation (JBIC) and two Japanese commercial banks (The Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation) will provide loans to Iraq for the purchase of the Japanese equipment and facilities, and NEXI will provide loan insurance to support the two commercial lenders.
The Iraqi economy is suffering from rampant power outages caused by unstable power supply which has failed to keep up with the growing demand due to shortage of power generation and transmission facilities. This substation construction project is expected to contribute to improving the country’s power supply reliability as well as infrastructure development. The Iraqi government highly values the Japanese technology and quality, increasingly expecting their contribution to Iraq’s infrastructure. NEXI’s financial support to the exports of Japanese equipment will help Japanese companies to expand business in Iraq and maintain and strengthen their international competitiveness.
NEXI will continue to actively support Japanese overseas business.
|Insured||The Bank of Tokyo-Mitsubishi UFJ as Agent, Sumitomo Mitsui Banking Corporation|
|Insurable Value||JPY 6.9 billion + equivalent USD 129 million|
|Tenor||Approx. 6 years|
|Covered Risks||Political Risk 100%, Commercial Risk 95% (with Sovereign Special Clause)|
Contact: Power Group, Structured and Trade Finance Insurance Department