ANNOUNCEMENT 08 Mar 2010In March 2010, the government of Japan announced new support for the overseas expansion of domestic firms.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation press release: JBIC Provides Project Finance and Political Risk Guarantee for Paiton Thermal Power Plant Expansion Project in Indonesia
Available at: http://www.jbic.go.jp/en/information/press/press-2009/0308-7153
JBIC information on overseas investment loans: http://www.jbic.go.jp/en/finance/investment
On 8 March 2010, the Japan Bank for International Cooperation (JBIC) signed a maximum USD 1.215 billion overseas investment loan agreement in project financing with Indonesian PT Paiton Energy. The company is owned by the two Japanese companies Mitsui & Co., Ltd. (Mitsui) and the Tokyo Electric Power Company, Inc. (TEPCO). In addition, a number of commercial banks will co-finance the project with a similar loan amount. JBIC will provide a political risk guarantee for this portion.
The loan will finance PT Paiton Energy's thermal power plant expansion project in Indonesia. Here the company will build an additional 815 MW power plant to expand the capacity from its power station's original capacity of 1,230 MW.
In this context the Bank stated: '...JBIC is committed to supporting Japanese firms for expanding overseas infrastructure development business and for maintaining and improving their international competitiveness through continued dialogue with the Indonesian government, project structuring by drawing on its variety of financial tools and its risk-assuming functions in individual projects.'
Project financing loans include preferential terms such as repayments being solely made from the project's cash flow generation and secured on the basis of the project's assets alone. As such the loan agreement is tied to the project's finances and not the company in question.
Overseas investment loans
JBIC provides direct loans named overseas investment loans to Japanese companies, overseas affiliates or joint ventures where Japanese companies hold equity interests and governments or financial institutions partying with such overseas affiliates. Loans support projects in specific sectors or with a specific purpose of interest to Japan. Further information can be found on the Bank's website under overseas investment loans.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
According to UN Comtrade, no trading partner exceeded the GTA threshold of USD 1 million on the affected tariff lines in the year prior to the intervention. Thus, no affected trading partners have been identified.