Icelandic national power company Landsvirkjun has signed a US$68mn loan agreement for the purchase of two geothermal turbines from Japan’s Fuji Electric.

The Japan Bank for International Cooperation (JBIC) provided buyer’s credit of up to US$34mn at a fixed interest rate. Citi was facility agent and co-ordinator, lead arranger and lender. Citi, Bank of Yokohama and Commerzbank co-financed up to US$34mn at a floating rate and Nippon Export and Investment Insurance (NEXI) providing insurance cover.

The financing has a 20-year tenor without a guarantee of collection. This is the first JBIC-NEXI buyer’s credit facility for a renewable energy project with a high-income OECD country.

“This is a milestone agreement for Iceland and Japan since this is the first ECA financing Iceland receives from Japan. We are very pleased with the support from the Japanese institutions to finance our first geothermal renewable energy project,” says Landsvirkjun CEO Hordur Arnarson.

The work on the 45MW Theistareykir geothermal power plant is scheduled to start operation in 2017.