Turkmenistan / Loan Insurance for State Corporation Natural Gas Power Plant Construction Project
- First TFEB Project Based on MOU with NEXI -
Nippon Export and Investment Insurance
Nippon Export and Investment Insurance (NEXI; Chairman and CEO: Kazuhiko Bando) has decided to provide loan insurance to support commercial bank loans for a natural gas power plant which will be constructed in Lebap province by Turkmen State Power Corporation “Turkmenenergo.”
In October 2015, NEXI and the State Bank for Foreign Economic Affairs of Turkmenistan (“TFEB”) signed a Memorandum of Understanding1 (“MOU”) aiming to facilitate trade and investment activities between the two countries. This is the first project supported by NEXI based on the MOU, taking a strong support request from the government of Turkmenistan for expanding exports from Japan.
In this construction project, Sumitomo Corporation takes a role of EPC contractor and procures the plant’s main equipment, including the gas turbine and power generator (about 400MW) from Mitsubishi Hitachi Power Systems, Ltd (“MHPS”). Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation (“SMBC”), and ING Bank N.V. Tokyo Branch will co-finance the procurement and construction of the plant. NEXI’s insurance will support the commercial banks’ loans (about JPY 12 billion). NEXI has also entered into a Supplemental Agreement2 with TFEB and SMBC.
Based on the Power Purchase Agreement between the government of Turkmenistan and the government of Afghanistan, the electricity generated in this project will be exported from Turkmenistan to Afghanistan. As one of the restoration assistance programs, it is expected to contribute to Afghanistan’s social and economic stability and development. The project is also important for Turkmenistan which holds the world’s fourth largest natural gas reserves.
As Sumitomo Corporation has been focusing on the development of power markets in emerging economies, this project will help expand its power infrastructure business in the Central Asia region. MHPS’s highly efficient gas turbine will also contribute to enhancing energy efficiency and reducing environmental load in Turkmenistan. The project will lead to increased trade and investment between Turkmenistan and Japan as well as strengthening of competitiveness of Japanese companies.
As a financial institution implementing Japan’s policy, NEXI will continue to support Japanese exports.
| Borrower | The Government of Turkmenistan ※ (※Borrowing via TFEB) |
| Insured | Sumitomo Mitsui Banking Corporation ING Bank N.V., Tokyo Branch |
| Insurable Value | About JPY 12 billion |
| Tenor | Approx. 6 years |
| Covered Risks | Political Risk 100% and Commercial Risk 95% |
Contact: Power Group, Structured and Trade Finance Insurance Department
Tel: 03-3512-7340
1 For details of MOU, please see Topics (News Release), October 26, 2015.
2 Supplemental Agreement aims to deepen the understanding among parties on general terms, conditions and procedures of NEXI loan insurance.