financial support for clean coal technology by jbic
DESCRIPTION
Roundtable GTRANSCRIPT
Financial Support for
Clean Coal Technology
by JBIC
Munetaka Horiguchi
Executive Officer for Asia and Pacific
Japan Bank for International Cooperation (JBIC)
2
1. Profile of JBIC
2. Major Financial Instruments
3. Project Finance to Coal-fired Power Project under PPP
4. Financial Support for Clean Coal Technology
4-1 First Financing for Ultra Super Critical Coal-fired Power Project
4-2 Carbon Capture and Storage (CCS) through Enhanced Oil Recovery (EOR)
Contents
1. Profile of JBIC
• Governor : Mr. Hiroshi Watanabe
• Supervised by: Ministry of Finance of Japan
• Total Assets*: JPY 16,346bil (USD 160.5bil)
• Net Assets*: JPY 2,341bil (USD 22.9bil)
• Capital (100% owned by Government of Japan) **:
JPY 1,391bil (USD 13.6bil)
• Overseas Rep Offices: 16
• Number of Employees: 531
• Ratings: Moody’s Aa3 (stable), S&P AA- (negative)
3
* Figures as of March 31, 2014
** Figures as of June 27, 2014
USD amount calculated on the basis of USD=JPY101.79 for the reference
1. Profile of JBIC
Mission:
JBIC’s mission is to contribute to the sound development of
Japan and the international economy and society by
conducting its operation in the following fields:
(1) Promoting the overseas development and securement of resources
which are important for Japan
(2) Maintaining and improving the international competitiveness of
Japanese industries
(3) Promoting the overseas business having the purpose of preserving
the global environment, such as preventing global warming
(4) Preventing disruptions to international financial order or taking
appropriate measures with respect to damages caused by such
disruption
4
2. Major Financial Instruments
5
Export loans are provided to overseas
importers and financial institutions to support
finance exports of Japanese machinery,
equipment and technology mainly to
developing countries.
Overseas Investment Loans
Export Loans
Overseas investment loans support
Japanese foreign direct investments. They
are extended to Japanese companies
(investors), overseas affiliates including joint
ventures where Japanese companies have
equity interests and governments or financial
institutions that make equity participations in
or extend loans to such overseas affiliates.
3. Project Finance to Coal-fired Power Project under PPP
6
Acceleration of Infrastructure Development through Public-Private Partnership (PPP)
3. Project Finance to Coal-fired Power Project under PPP
7
Independent Power Producer (IPP) project is a good example of solution of infrastructure development in the
power sector under PPP initiative.
Optimal and appropriate risk sharing among parties concerned (Public or Private) is a key to achieve
successful development of the project.
JBIC supports development of IPP projects through provision of the Project Finance.
IPP Project
Company
Equity
Project
Finance
Loans
Offtake Contract
(PPA)
Project
Sponsor
Project
Sponsor
Electricity
Offtaker
Co-financing banks
Coal
SupplierEPC
Contractor
O&M
Contractor
Coal Supply EPC O&M
Host
Country
Governme
nt
Government
Support
3. Project Finance to Coal-fired Power Project under PPP
8
• Trade-off between technology and up-front initial cost
Sub Critical Super Critical Ultra Super Critical
Initial Cost $1,787mil $1,897mil $1,931mil
Efficiency (LHV) 38.2% 41.1% 42.1%
CO2 Emission 5.6 mil ton/year 5.2 mil ton/year 5.1 mil ton/year
Generation Cost $6.85cent/kWh $6.79cent/kWh $6.77cent/kWh
Assumption: Capacity 1,000MW, Coal CV 4,000kcal/kg, Coal Price $50/ton, Expected IRR 9.5%
• JBIC supports for longer term financing of higher up-front initial cost
Source: ERIA study for Strategic Usage of Coal
Higher up-front initial cost of Clean Coal Technology(CCT) project demands
for longer term financing. JBIC plays an important role in longer term
financing, including extending Project Finance under IPP structure.
4. Financial Support for Clean Coal Technology
4-1. First Financing for Ultra Super Critical Coal-fired Power Project
9
Morocco/ Ultra supercritical coal-fired power project
JBIC provided finance for the first time to USC project(“Safi”) in September 2014,
1,250MW(625MW×2) ultra supercritical coal-fired power project. This project is the
first ultra supercritical coal-fired power project in Africa.
http://www.jbic.go.jp/ja/information/press/press-2014/0919-29148
Project
CompanyIslamic Development Bank
GDF SuezMitsui &
Co
Equity
Loans
Commercial
Banks
Guarantee
10
Project Financing for Thermal Power Generation
Project in the Kingdom of Morocco
Supporting First Ultra Super Critical Coal-fired Power Plant in Africa, Participated by
Japanese Company
September 19, 2014
1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi
Watanabe) signed on September 18 loan agreements, in project financing*1, totaling
up to approximately USD718 million and EUR147 million (JBIC portions)
respectively with Safi Energy Company S.A. (Safi), invested by Mitsui & Co., Ltd.
(Mitsui), Electrabel S.A.(Electrabel), a Belgian company which is a subsidiary of
French company GDF SUEZ S.A., and Nareva Holding S.A. (Nareva), a company in
the Kingdom of Morocco (Morocco), for financing the Safi coal-fired power
generation project. The loans are co-financed with private financial institutions
including The Bank of Tokyo-Mitsubishi UFJ, Ltd., Sumitomo Mitsui Banking
Corporation, The Mizuho Bank Ltd., Sumitomo Mitsui Trust Bank, Limited*2, and
Islamic Development Bank, bringing the overall co-financing amount to the
equivalent of approximately USD2.107 billion*3.
2. These loans are intended to finance Safi to build and operate the Ultra Super
Critical Coal-fired Power Plant with a capacity of approximately 1,250 MW (625
MW x 2 units) in the city of Safi located approximately 300km South-west of Rabat,
the capital of Morocco, and will sell the electricity generated by this power plant to
the Office National de l'Electricité et de l'Eau Potable (off-taker) for a period of 30
years after the completion of the construction. JBIC's support for this project
through these loans, will contribute to maintaining and strengthening the
international competitiveness of Japanese industries.
3. This is the first Ultra Super Critical Coal-fired Power Plant project for JBIC and for
the Africa region. The Government of Japan claims, in the "Strategy relating
Infrastructure Export and Economic Cooperation" revised June 2014, the
implementation to strengthen business support and orders of the system, including
designing, construction, operation and management of infrastructure by public
finance, and in the "Strategic Energy Plan" revised also in June 2014, the
implementation to promote the conversion of power generation facilities to
high-efficiency thermal power generation which will also contribute to reducing
CO2 emissions in emerging economies and developing countries. In addition, the
Japanese government claims to support developing countries in the climate change
sector in the "Actions for Cool Earth" (ACE) announced in December 2013. Thus,
these loans are consistent with such government measures.
4.The promotion of investment and trade through collaboration between the public
and private sector in the African region was announced by the Government of
Japan at the TICAD V, and these loans are made, under the JBIC Facility for
African Investment and Trade Enhancement ("FAITH")*4, to support the promotion
of private sector-led growth and the acceleration of infrastructure development in
African countries. In recent years, Morocco registers an annual average rate of
about 7% increase in electricity demand backed with the steady economic growth,
and the project will become the important power source for Morocco*5.
5.As Japan's policy-based financial institution, JBIC will continue to support
overseas deployment of infrastructure business of Japanese companies and
contribute to maintaining and strengthening of the international competitiveness of
Japanese industries, by drawing on its various financial facilities and schemes for
structuring projects, and performing its risk-assuming function.
Note
1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows
generated by the project and secured only on the project assets.
2. *2 Other private financial institutions include BNP Paribas, Crédit Agricole Corporate and Investment
Bank, Société Générale S.A., Standard Chartered Bank, and local Moroccan financial institutions
including Attijariwafa Bank and La Banque Centrale Populaire.
3. *3 Nippon Export and Investment Insurance (NEXI) will provide the insurance for the part of
co-financed portion by the private financial institutions.
4. *4 See News Release on June 3, 2013.
5. *5 JBIC signed a memorandum of understanding (MOU) on comprehensive strategic partnership with
the Government of Morocco in March 2011 to enhance economic relationships in view of a potentially
large business opportunity in the country. See Press Release on March 8, 2011.
4. Financial Support for Clean Coal Technology
4-1. First Financing for Ultra Super Critical Coal-fired Power Project
11
USA/ CO2-Enhanced Oil Recovery (EOR) project
JBIC provided finance in July 2014 to the project which is a post-combustion carbon
capture-enhanced oil recovery project. The borrower builds a carbon capture and
storage system in the coal-fired power plant and increases oil recovery at an oil field
in Texas, by injecting the CO2 removed from the flue gas of the power plant.
http://www.nrg.com/business/wholesale/carbon-capture/wa-parish-ccs-project/
Increase of oil
production
500b/d to
12,000b/d
CO2 emission
reduction
1.6million tons/y
4. Financial Support for Clean Coal Technology
4-2. Carbon Capture and Storage (CCS) through Enhanced Oil Recovery (EOR)
12
4. Financial Support for Clean Coal Technology
4-2. Carbon Capture and Storage (CCS) through Enhanced Oil Recovery (EOR)
Project Financing for Post-Combustion Carbon
Capture-Enhanced Oil Recovery Project in the
United States
Supporting Acquisition of Interest and Development of Oil Field of Japanese Company
and Large-scale Carbon Capture Technology to be provided by Japanese Company
July 15, 2014
1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi
Watanabe) signed on July 14 a loan agreement, in project financing*1, totaling up to
USD175 million (JBIC portion) with Petra Nova Parish Holding LLC (PNPH) in the
United States of America, which is owned equally by JX Nippon Oil & Gas
Exploration Corporation (JX NOEX) and NRG Energy Inc. (NRG), an American
company. The loan is cofinanced with Mizuho Bank, Ltd. (MHBK), bringing the
total cofinanced amount to USD250 million, and MHBK's portion will be insured by
Nippon Export and Investment Insurance (NEXI).
2. The project is a post-combustion carbon capture-enhanced oil recovery project, in
which PNPH builds a carbon capture system*2 in the W.A. Parish coal-fired power
plant owned by NRG's subsidiary in Texas and increases oil recovery at West Ranch
oil field in Texas, by pressure injecting the carbon dioxide (CO2) removed from the
flue gas of the power plant. JX NOEX is participating indirectly in the project by
investing equity for 50% in PNPH, which makes 25% of the interests in West Ranch
oil field and enables to acquire a disposal right of crude oil production
commensurate with the existing interests. The loan will partially fund the capital
required for the acquisition of the interests and procurement of plant facilities.
3. In this project, it plans to pressure inject CO2 into the oil field from the 4th quarter
of 2016, increasing daily production to an average of 12,000 barrels from 500
barrels of its current crude oil production. Although EOR utilizing CO2 have been
popular globally, this EOR utilizing CO2 from the flue gas of a coal-fired power
plant will be the world's first large-scale commercial project and enables to produce
additional crude oil from the existing oil field, as well as reducing CO2 emission by
1.6 million tons annually into the atmosphere from the W.A. Parish coal-fired
power plant, and thus this project is expected to contribute to both the increased
production of energy resources and mitigate the impact on the global environment.
4.As Japan's policy-based financial institution, JBIC will continue to actively
support the development and interest acquisition of important resources by
Japanese companies, by drawing on its various financial facilities and schemes for
structuring projects, and performing its risk-assuming function.
Note
1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows
generated by the project and secured only on the project assets.
2. *2 The carbon capture system will be built by a consortium of Mitsubishi Heavy Industries America,
Inc., a US subsidiary of Mitsubishi Heavy Industries, Ltd., and The Industrial Company, a major US
construction company, and will be the world's largest CO2 capture plant with a production capacity of
4,776 tons a day.