Japan Bank for International Cooperation (JBIC) has signed with AES Jordan a loan agreement totalling up to US$110mn in project financing for the Amman East IPP Project.

The loan is cofinanced with Overseas Private Investment Corporation (Opic), a governmental financial institution of the US, and Sumitomo Mitsui Banking Corporation (SMBC) (up to US$70mn and US$45mn respectively), with the World Bank providing partial risk guarantee for the SMBC-cofinanced portion.

The loan will provide funds in project financing for AES Jordan, a company that Mitsui & Co has established jointly with AES Oasis, a subsidiary of AES Corporation, a US power producer, to construct a combined cycle natural gas-fired thermal power plant (capacity: 370MW) in the outskirts of Almanakher Village, approximately 15km to the east of Amman, the capital of Jordan.

The power to be generated in the plant will be sold to the state-owned electric utility of Jordan for 25 years under the build-own-operate (BOO) scheme. This is the first independent power producer (IPP) project in Jordan, and the government considers it to be part of its efforts for the power sector reforms, for which the World Bank has been providing support since 1995. This is also the first loan that JBIC provides in project financing for Jordan.

Amid tightening demand for energy resources across the world, Japan, which is dependent on imports from the Middle East for approximately 90% of its crude oil, is strongly urged to ensure stable political and economic conditions in the Middle East, as well as to strengthen ties with countries in the region.

This loan will financially support efforts to develop and manage economic infrastructure (electric power) effectively by banking on the private-sector vitality in Jordan, a country taking a leading role in stabilising political and economic conditions, democratization as well as the peace process in the region. The loan will thereby contribute to economic growth in Jordan and will help to cement Japan-Jordan ties.

Taking advantage of its capability as a public financial institution, JBIC intends to support Japanese companies’ business development in the Middle East by facilitating effective project formation and by utilizing its risk taking function.