Emirate of Sharjah, United Arab Emirates / NEXI Provides Loan Insurance to Support Al Layyah Gas-fired Combined-Cycle Power Plant

March 29, 2019

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI, Chairman and CEO: Kazuhiko Bando) has decided to provide insurance for a loan extended by private financial institutions for a gas-fired combined-cycle power plant project operated in Layyah in the Emirate of Sharjah (hereinafter “Sharjah”) by Sharjah Electricity and Water Authority (SEWA). This will be the first loan insurance for NEXI to offer for a project in Sharjah.

Mitsubishi Hitachi Power Systems, Ltd. (MHPS) and Elsewedy Power S.A.E. have joined the project as EPC contractors forming a business consortium. MHPS is to provide core equipment in the project, including two gas turbines, one steam turbine, three generators and two heat recovery steam generators (equivalent to 1,026.3MW). Loans for the project are provided through co-financing by Japan Bank for International Cooperation, Societe Generale, ING Bank and Standard Chartered Bank. NEXI will provide a loan insurance for a portion by private financial institutions (approx. USD 241 million).

In Sharjah, further increase in power generation capacity has become imperative with growing power demand, backed by its ongoing economic growth. The delivery of MHPS’s high efficiency products such as gas turbines will allow SEWA to replace its power generation plant, to expand generating capacity, and to realize stable low-cost power supply through power generation efficiency improvement, while reducing burden on the environment.

MHPS is actively making efforts to develop high efficiency clean products that support various energy situations around the world, and the project meets the purpose of “Infrastructure Export Strategy” that the Japanese government is carrying out. It is hoped that NEXI’s financial support to the project will result in Japanese companies’ business expansion in the power infrastructure field in the Middle East region, strengthening their international competitiveness.

In the NEXI’s decision whether or not to underwrite insurance, undertaking a risk assessment was an important point of consideration. NEXI has examined the content of the project by setting up opportunities for direct dialogues with SEWA and other relevant organizations. The loan insurance for the project can be positioned as an insurance item realized aligning with NEXI’s Sub-Sovereign risk underwriting policy1 published in April 2016, as a part of the institution’s functional enhancement to achieve “Partnership for Quality Infrastructure” announced by Japanese Prime Minister Shinzo Abe in May 2015.

As Japan’s policy-based financial institution, NEXI will continue to actively support Japanese companies in the expansion of their business internationally.

Loan customer Sharjah Electricity and Water Authority
Insured Societe Generale, ING Bank, Standard Chartered Bank
Insured Value approx. USD 241 million
Tenor approx. 14 years
Covered risks Political risk 100%, Credit risk 95%

Contact: Power Group, Structured and Trade Finance Insurance Department
Tel: 03-3512-7340

1 Regarding the Sub-Sovereign risk underwriting policy, please refer to the press release in Japanese issued on April 1, 2016.