The Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling up to US$1bn in project financing for the Al Hidd Independent Water and Power Producer Project.

The loan agreement is with Hidd Power Company, a corporation of the Kingdom of Bahrain, and is co-financed with six financial institutions (including Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation).

Hidd Power will purchase an existing power generation and desalination plant close to Bahrain’s capital, Manama, from the ministry of electricity and water of Bahrain. Hidd Power will also construct a desalination plant to sell electric power and water to the ministry of electricity and water for 20 years through the BOO scheme.

Through this loan, JBIC is supporting Japanese companies looking to invest in the growing electric power and water markets in the Middle East. This is the first IWPP project that Japanese companies have undertaken in Bahrain and the first loan that JBIC has extended in project financing for a project in Bahrain.

Japan is dependent on imports from the Middle East for some 70% of its crude oil and needs to ensure stable economic conditions in the region. JBIC’s loan will contribute to economic growth in Bahrain and will help to cement Japan-Bahrain ties.

Hidd Power Company was established by equity participation by Sumitomo Corporation, International Power, a UK power producer, and Suez Tractebel, a Belgian energy infrastructure company.