JBIC helps propel wind power project

February, 2004

The Japan Bank for International Cooperation (JBIC) has recently signed an official development assistance (ODA) loan agreement for 13,497 billion yen ($125 million) with the New and Renewable Energy Authority (NREA) of Egypt to finance the Zafarana wind power plant project.

According to the bank, the proceeds of the loan will be used to procure equipment and consulting services to construct a wind power plant in Zafarana, on the coast of the Red Sea, with a power capacity of 120 MW.
Power demand in Egypt is forecast to grow by five to seven per cent annually in the coming years and by 2012, the government intends to generate 880 MW out of a projected 11,279 MW through setting up power plants that exploit renewable energy sources.
Wind power is expected to account for more than 90 per cent of these sources and the Zafarana wind power plant will be the largest of its kind in Egypt.
As the project will help reduce greenhouse gas emissions, it is likely that it might use the clean development mechanism (CDM), which was adopted under the Kyoto Protocol. The CDM is a system whereby countries implementing projects that reduce greenhouse gas emissions in developing countries can acquire emission reduction credits. If the Zafarana project is approved as a CDM, it will help Japan achieve its target of a six per cent reduction in greenhouse gas emissions, which it is committed to under the Kyoto Protocol.
JBIC and NREA have already started the application procedure and the wind power project could well become the first CDM to be financed by an ODA loan.
The JBIC is the result of the merger between the Export-Import Bank of Japan (JEXIM) and the Overseas Economic Cooperation Fund (OECF), and was established in 1999. It undertakes lending and other financial operations, which contribute to the sound development of the Japanese and international economy.

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