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Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling US$210mn with Mexico’s Electricidad Sol de Tuxpan (EST), a company in which Mitsubishi Corporation and Kyushyu Electric Power have joint stakes. The loan will be co-financed with Mizuho Corporate Bank (as the agent bank), the Bank of Tokyo-Mitsubishi and the Tokyo branch of Standard Chartered. 
JBIC also provides a guarantee that covers the political risk in Mexico for the portion financed by the private financial institutions. 
Under this loan, EST will construct a natural gas-fired combined-cycle thermal power plant with a 495MW-capacity in Tuxpan, State of Veracruz, 250km northeast of the capital Mexico City, and sell the electricity generated at the plant to Comisin Federal de Electricidad for a period of 25 years. The loan will consist of long-term funds necessary for the project on a project finance basis.
In light of the good macroeconomic outlook, power demand in Mexico is projected to grow at an annual average of more than 5% until 2012. The government of Mexico is planning to increase its power generation capacity 1.5-fold (from 41,177MW in 2002 to 62,730MW in 2012) during this period.
To meet such a rising power demand, the government has been actively promoting independent power producer (IPP) projects since 1992 when the Electricity Law was amended. Following government policy, the project is undertaken on the basis of a BOO (build, own and operate) scheme. The project, which uses natural gas that promotes utilisation of clean energy, will thus contribute to achieving a stable power supply in Mexico.
Japanese firms regard the Mexican power sector as a promising market and have been making active investments in the IPP projects in Mexico. Accordingly, JBIC has extended financial support over the years to meet their financing needs. This is the fifth IPP project that JBIC has supported with its financing in Mexico.  Additionally, JBIC provides support for the international operations of the Japanese banks by providing a guarantee that covers the political risk in Mexico.