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

April 1, 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 construction and operation project conducted in Hamriyah in the Emirate of Sharjah (hereinafter “Sharjah”). This is a project to be undertaken by Sharjah Hamriyah Independent Power Company PVJSC (the power company), sponsored by Sumitomo Corporation (Sumitomo), Shikoku Electric Power Co.,Inc. (Shikoku Electric Power), GE Energy Financial Service Co., Ltd. (GE EFS) and Sharjah Asset Management Holding LLC1.

This will be Sharjah’s first IPP project, and NEXI’s second loan insurance for a project in Sharjah, following the Al Layyah Gas-fired Combined-Cycle Power Plant2. The gas-fired combined-cycle power plant project is to be implemented under a Build, Own, Operate scheme, with a plant capacity of 1,800MW. Actual sales of electric power to Sharjah Electricity and Water Authority (SEWA) is scheduled for a period of 23.5 years following the commencement of full project commercial operation.

These Japanese companies’ consistent business activities not only in investment into the power company but also in the plant operation and management meet the purpose of “Infrastructure Export Strategy” that the Japanese government is carrying out.

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 policy3 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.

The power company is also receiving capital investment from GE EFS, a subsidiary of General Electric (GE) in the U.S., and GE’s high efficiency gas turbines have been adopted for the project. With these facts, the project is also positioned as one of the U.S.-Japan infrastructure cooperative activities promoted through the U.S.-Japan Economic Dialogue by the Japanese government.

In April 2018, the project was announced at the Second Public-Private Sector Roundtable Discussion on U.S.-Japan Cooperation on Third Country Infrastructure, as a U.S.-Japan infrastructure cooperative activities, and it has now yielded a good result of NEXI’s insurance underwriting and signing of the loan agreement4.

Loans for the project are provided through co-financing by Japan Bank for International Cooperation and private financial institutions including Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Norinchukin Bank, Standard Chartered Bank and Societe Generale. NEXI has agreed to provide a loan insurance for a portion provided by the private financial institutions (approx. USD 516 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 high efficiency equipment 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. It is hoped that NEXI’s financial support to the project will result in Japanese companies’ business expansion in the Middle East region, and strengthened international competitiveness in the field of high efficiency gas-fired power plant businesses with low environmental impact, while contributing to the region’s economic and social development.

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 Hamriyah Independent Power Company PVJSC
Insured Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Norinchukin Bank, Standard Chartered Bank, Societe Generale
Insured Value approx. USD 516 million
Tenor approx. 24 years
Covered risks Political risk 100%, Credit risk 90%

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

1 Investment ratio:Sumitomo 35%, Shikoku Electric Power15%, GE EFS 25%, Sharjah Asset Management Holding LLC 25%

2 For details of the Al Layyah Gas-fired Combined-Cycle Power Plant, please refer to the press release issued on March 29, 2019.

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

4 As for NEXI’s insurance items provided for U.S.-Japan infrastructure cooperation projects, please refer to the following information:
- Hashemite Kingdom of Jordan / Al Manakher Solar Power Generation Project (Press release issued on January 22, 2018)
- Republic of Indonesia / Jawa 1 LNG to Power Project (Press release issued on October 22, 2018)