Japan Bank for International Cooperation (JBIC) has signed a facility agreement for a buyer’s credit facility totalling about €
162mn with National Petrochemical Company (NPC) of Iran. This agreement aims to provide an export credit facility in the form of direct credit, to finance Japanese firms’ exports to Iran.
The credit facility is cofinanced with HSBC, Tokyo branch (agent bank), and Standard Chartered Bank, Tokyo branch.
This facility will finance the export of equipment and services by corporate syndicates, including Mitsui Engineering & Shipbuilding for the construction of an ethylene glycol plant with an annual production capacity of around 550,000 tons in Kharg Island of Iran, which lies 30km off the Iranian coast in the Persian Gulf. Ethylene glycol is the raw material for polyester fiber and polyethylene terephthalate which are used for plastic bottles, and so on. Petrochemical Industries Development Management, a subsidiary wholly owned by NPC, is in charge of the implementation of the project.
Whereas JBIC has provided export credit facilities to Iran since the resumption of credits in March 2001, all the facilities previously provided were guaranteed by the Iranian government. However, since last year, JBIC has already provided two facilities to NPC, one of the highly rated governmental enterprises in Iran, relying on NPC’s credit. This is the third facility without Iranian government guarantee that JBIC has provided to Iran, and JBIC’s first euro-denominated export facility.
This facility is expected to increase the chances of Japanese firms receiving export orders from NPC, thereby contributing to closer trade ties between Japan and Iran, one of the world’s major oil producing countries.