People’s Republic of Bangladesh/NEXI to Provide Investment and Loan Insurance to Support Meghnaghat 718MW Natural Gas Combined Cycle Power Plant Project

July 31, 2020

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI; Chairman and CEO: Atsuo Kuroda) has decided to provide insurance to support investments and loans in a natural gas combined cycle power plant project carried out by Reliance Bangladesh LNG & Power Limited (hereinafter referred to as “project company”) 2, sponsored by JERA Co., Inc. (JERA) 1, in People’s Republic of Bangladesh (Bangladesh). This is the first time for NEXI to offer its investment and loan insurance for project finance realized in Bangladesh.

The project is to build, own and operate a 718MW natural gas combined cycle power plant at the Meghnaghat area, around 40km southeast of the capital city of Dhaka. Under a long-term power purchase agreement with the Bangladesh Power Development Board, the electricity generated will be sold for 22 years after commercial operation starts.

JERA will not only play a leading role in the power plant management via its investment into the project company, but also intends to take initiatives in the operational phase of the project utilizing its abundant experience accumulated in operating power generation plants in several regions around the world including Japan, North America, Asia and Middle East. Such overall efforts made by JERA, which range from the project company management to the power plant operation, are in line with the Japanese government’s Infrastructure Systems Export Strategy revised in June 2019.

Through providing insurance for JERA’s investment in the project, NEXI will help Japanese companies expanding their investment activities in Asia.

Also, out of the project finance jointly provided by the Japan Bank for International Cooperation (JBIC), the Asian Development Bank (ADB), Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd. and Societe Generale Tokyo branch, NEXI will cover the USD 177milion loans provided by private financial institutions.

In Bangladesh, a shortage of power supply has become an issue as the country’s economy expands, the government therefore plans to increase the country’s power generation capacity. The project has been considered to be part of the government’s electricity development program, and will contribute to the country’s industrial development and economic growth. Moreover, with support from NEXI by assisting the project both through investment and loans, the project is expected to generate new business opportunities for Japanese companies expanding into Asian countries, and to strengthen their international competitiveness in the field of high-efficiency power generation business.

As Japan’s policy-based financial institution, NEXI will continue to actively support Japanese companies’ overseas expansion.

1. Overseas Investment Insurance
Insured JERA Co., Inc.
Covered risk Political risk: 95%
2. Loan Insurance
Direction of financing Reliance Bangladesh LNG & Power Limited
Insured Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., Societe Generale Tokyo branch
Insured value USD 177milion
Tenor 18 years
Covered risk Political risk:100%,
Credit risk: 90%

Overseas Investment Insurance Underwriting Group Ⅱ, Underwriting Department
Tel: 03-3512-7600
Power Group, Structured and Trade Finance Insurance Department
Tel: 03-3512-7340

1 Investment ratio: TEPCO Fuel & Power, Inc. 50%, Chubu Electric Power Co., Inc. 50%

2 Investment ratio: JERA 49%, Reliance Power Limited 51%