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Japan Bank for International Cooperation (JBIC) has signed a facility agreement for a buyer’s credit facility totalling up to about Y20.5bn with National Petrochemical Company (NPC) of Iran to provide an export credit facility in the form of a direct credit to finance Japanese firms’ exports to the Islamic Republic of Iran. The credit facility is cofinanced with HSBC, Tokyo (the agent bank), Bank of Tokyo-Mitsubishi and Société Généale, Tokyo.

This facility will finance the export of equipment and services by corporate syndicates, including Toyo Engineering and Chiyoda, in the construction of a world-class fertiliser plant with a daily production capacity of 2,050 tons for ammonia and 3,250 tons for urea at a neighbouring section of an existing fertiliser plant in Bandar Assaluye on the Persian Gulf coast. Petrochemical Industries Development Management Company, a subsidiary wholly owned by NPC, being in charge of implementation of the project.

Whereas JBIC has provided the export credit facilities for five projects totalling Y44.3bn to Iran since the resumption of credits in March 2001, all the facilities previously provided were guaranteed by the Iranian government. For this facility, however, JBIC has decided to take on directly the credit risk of NPC, one of the highly rated governmental enterprises in Iran. This is the first facility without Iranian government guarantee that JBIC has provided to Iran. By establishing a path for credit to NPC, this facility is expected to boost the chances of Japanese firms receiving export orders from NPC in the coming years.

This facility is also expected to support financially Japanese exporters in their efforts to export more equipment and machinery, thereby contributing to closer trade ties between Japan and Iran, one of the world’s major oil producing countries.