11850 Munetaka Horiguchi
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Transcript of 11850 Munetaka Horiguchi
11
Realigning risk profiles with Realigning risk profiles with
project financing to improve project financing to improve
project successproject success
21 May 200721 May 2007
Project Finance DepartmentProject Finance Department
Japan Bank for International Japan Bank for International Cooperation (JBIC)Cooperation (JBIC)
22
ContentContent
ⅠⅠ.. JBICJBIC’’ss ProfileProfile
ⅡⅡ.. Identifying list of risksIdentifying list of risks affecting affecting
project financeproject finance
ⅢⅢ.. Case StudyCase StudyーーMethanol ProjectMethanol Project
ⅥⅥ.. Possibility of other risk Possibility of other risk controllcontroll
-- Collaboration with IslamicCollaboration with Islamic
FinanceFinance
-- Cooperation with Asian ECACooperation with Asian ECA
33
ⅠⅠ. . JBICJBIC’’ss ProfileProfile
44
ProfileProfile
A Japanese Governmental Financial Institution. A Japanese Governmental Financial Institution.
JBIC is 100% owned by the Government of JBIC is 100% owned by the Government of Japan.Japan.
Established in October 1999 after the merger of Established in October 1999 after the merger of the Exportthe Export--Import Bank of Japan (JEXIM) and Import Bank of Japan (JEXIM) and the Overseas Economic Cooperation Fund the Overseas Economic Cooperation Fund (OECF).(OECF).
Operations :Operations :
1) International Finance Operations (IFO) 1) International Finance Operations (IFO) (previously, JEXIM Operations)(previously, JEXIM Operations); and ; and
2) Official Development Assistance (ODA) 2) Official Development Assistance (ODA) (previously, OECF Operations)(previously, OECF Operations)..
55
ContCont’’d d –– ProfileProfile
1) Export loans2) Energy & Natural Resource
Loans3) Overseas
Investment loans4) Untied loans5) Bridge loans6) Equity participation
The primary objective of International Financial Operations is to contribute to the promotion of Japanese exports, imports and economic activities overseas, as well as the stability of international financial order.
1) ODA loans2) Private-Sector Investment
Finance3) Studies
The basic activity of Overseas Economic Cooperation Operations is to provide funds which encourage self-help efforts of developing countries for sustainable economic development.
InternationalFinancial
Operations
(IFOs)
OverseasEconomicCooperationOperations(OECOs = ODA)
•FILP*•Bond issues•Internal funds
•Government Investment funds•FILP*•Own funds, etc.
Sources Of
Funds
Sources Of
Funds
* Fiscal Investment and Loan Program
66
-- Comparison between JBIC and other MLAs Comparison between JBIC and other MLAs
in 2005in 2005
Volume of JBICVolume of JBIC’’s Financings Financing
0.0
5.0
10.0
15.0
20.0
WB ADB EBRD JBIC
com
mitm
ent
.
0.0
50.0
100.0
150.0
200.0
outs
tandi
ng
.
Commitment(US$ billion)
Outstanding(US$ billion)
*Exchange rate: \116=$1, $1.27=Euro1
Note: Each figures has been adjusted for comparison with JBIC’s relevant figures.
** JBIC’s amount is the total of IFOs and ODAs.
77
Restructuring of Japanese Restructuring of Japanese
Governmental Financial InstitutionsGovernmental Financial Institutions
To restructure the Japanese Governmental Financial To restructure the Japanese Governmental Financial Institutions, the Japanese Government decided to reInstitutions, the Japanese Government decided to re--organize institutions, including such as JBIC.organize institutions, including such as JBIC.
International Finance Operations will be merged with (4) International Finance Operations will be merged with (4) other domestic financial institutions other domestic financial institutions –– that is: that is: (1)(1)Japan Small and Medium Enterprise Corporation (JASMEC),Japan Small and Medium Enterprise Corporation (JASMEC),
(2)(2)National Life Finance Cooperation (NLFC) ,National Life Finance Cooperation (NLFC) ,
(3)(3)Agriculture, Forestry and Fisheries Finance Corporation of Agriculture, Forestry and Fisheries Finance Corporation of Japan,Japan,
(4)(4)Okinawa Development Finance Corporation (ODFC).Okinawa Development Finance Corporation (ODFC).
JBICJBIC’’ss new missionnew mission-- (1)Securing natural resources,(1)Securing natural resources, (2)Enhancing Japanese competitiveness,(2)Enhancing Japanese competitiveness, (3)Responding to disruptions of financial order (3)Responding to disruptions of financial order in the international in the international economy.economy.
88
JBICJBIC’’ss financial products financial products
International Finance Operations:International Finance Operations:
Export Credit Loan Export Credit Loan
Overseas Investment Loan Overseas Investment Loan
Guarantee Guarantee
Untied LoanUntied Loan
Equity ParticipationEquity Participation
99
Export Credit LoanExport Credit Loan
Provided to exporters or buyers of Japanese goods or Provided to exporters or buyers of Japanese goods or services.services.
Terms and Conditions of financing must be in line with Terms and Conditions of financing must be in line with OECD Guideline.OECD Guideline.
JBICProject Company (Overseas Importer)
Cross Border(Typical Example)
Commercial Bank(s) in Japan
NEXI
Insurance Cover
Direct Loan
Japanese Exporter(s)
EPC Contract
1010
Overseas Investment Loan (OIL) Overseas Investment Loan (OIL)
Applicable for Japanese firms, subsidiaries, joint ventures withApplicable for Japanese firms, subsidiaries, joint ventures with foreign foreign partners, who are investing in developing countries. partners, who are investing in developing countries.
Substantial involvement of Japanese business in project structurSubstantial involvement of Japanese business in project structure. e.
Procurement is not tied to Japanese goods and services.Procurement is not tied to Japanese goods and services.
OverseasSponsor(s)
(Typical Example)
JapaneseSponsor(s)
CommercialBank(s)
Project Company
JBIC
CommercialBank(s)in Japan
Direct Loan
EquityParticipation
Loan EquityParticipation
Cross Border
1111
Recent Project Finance RecordRecent Project Finance Record
<JBIC : Recent Project Finance Deals><JBIC : Recent Project Finance Deals>
USD 253 millionUSD 253 millionMay 5, 2007May 5, 2007BruneiBruneiBrunei Methanol projectBrunei Methanol project
USD 836 millionUSD 836 millionApril 26, 2007April 26, 2007QatarQatarMesaieedMesaieed A Independent Power Producer ProjectA Independent Power Producer Project
EUR 22.4 millionEUR 22.4 millionMarch 19, March 19,
20072007BulgariaBulgariaKaliakraKaliakra Wind Power ProjectWind Power Project
USD 110 millionUSD 110 millionMarch 15, March 15,
20072007JordanJordanAmman East IPP ProjectAmman East IPP Project
USD 593 millionUSD 593 millionApril 4, 2006April 4, 2006BahrainBahrainAlAl--Hidd Independent Water and Power ProducerHidd Independent Water and Power Producer
USD 126 millionUSD 126 millionMarch 31, March 31,
20062006BrazilBrazilEspadarte Floating Production Storage Offloading Espadarte Floating Production Storage Offloading
SystemSystem
USD 60 millionUSD 60 millionMarch 15, March 15,
20062006IndonesiaIndonesiaPaiton I Coal Fired Power Plant Equity AcquisitionPaiton I Coal Fired Power Plant Equity Acquisition
USD 2.5 billionUSD 2.5 billionMarch 2, March 2,
20062006KSAKSARabigh Refinery and Petrochemical ProjectRabigh Refinery and Petrochemical Project
USD 1 billionUSD 1 billionDec 22, 2005Dec 22, 2005QatarQatarQatar Gas III ProjectQatar Gas III Project
JBIC Financing JBIC Financing
AmountAmountSigning Signing
DateDateCountryCountryProjectProject
1212
JBICJBIC’’s General Approach to Project s General Approach to Project
AppraisalAppraisal
JBIC takes into account, interJBIC takes into account, inter--alia,:alia,:
(1) Extent of participation by Japanese companies,(1) Extent of participation by Japanese companies,
(2) Significance of interests for Japan,(2) Significance of interests for Japan,
(3) Trends in the relevant sector and supply(3) Trends in the relevant sector and supply--demand situation for target product,demand situation for target product,
(4) The host country(4) The host country’’s level of support,s level of support,
(5) The host country(5) The host country’’s legal framework,s legal framework,
(6) Ability to co(6) Ability to co--finance with private financial finance with private financial institutions, institutions,
(7) Environmental compliance.(7) Environmental compliance.
1313
ⅡⅡ.Identifying list of risks affecting .Identifying list of risks affecting project finance project finance
1414
Major commercial risks and Major commercial risks and
controllcontroll
・・long term contract basis.long term contract basis.
・・Guaranteed.Guaranteed.
ReserviorReservior/Feedstock/Feedstock
・・Sensitivity analysis.Sensitivity analysis.
・・Debt Service Reserve.Debt Service Reserve.
Cash flowCash flow
・・Contract basis. OffContract basis. Off--taking.taking.
・・Deferral, cash sweep.Deferral, cash sweep.
MarketMarket
・・longrtermlongrterm operation and maintenance.operation and maintenance.
・・Experienced operator.Experienced operator.
Operation Operation
・・Proven technology.Proven technology.TechnologyTechnology
・・EPC Contractor, experience.EPC Contractor, experience.
・・Sponsor support.Sponsor support.
CompletionCompletion
・・Main Main sponsor,Foreignsponsor,Foreign partner.partner.
・・Share retention.Share retention.
SponsorSponsor
PointPointRiskRisk
1515
Major political risks and Major political risks and controllcontroll
・・ legal framework.legal framework.
・・government supportgovernment support
Change in lawChange in law
・・ legal framework.legal framework.
・・government support.government support.
Contract breach by Contract breach by
governmentgovernment
・・legal framework.legal framework.
・・government support.government support.
ExpropriationExpropriation
・・legal framework.legal framework.
・・offshore escrow account.offshore escrow account.
・・USUS dollardollar
Currency Convertibility Currency Convertibility
and and
transfer, Foreign transfer, Foreign
exchange exchange
PointPointRiskRisk
1616
ⅢⅢ.. Case StudyCase Study
--Methanol Project in AsiaMethanol Project in Asia--
1717
Brunei Darussalam Methanol Brunei Darussalam Methanol
(Brunei)(Brunei)
Methanol plant 850,000 tons per Methanol plant 850,000 tons per
year in Brunei sponsored by year in Brunei sponsored by
Mitsubishi Gas Mitsubishi Gas
Chemical(MGC),ITOCHUChemical(MGC),ITOCHU Corporation Corporation
and and PetroleumBRUNEI(PBPetroleumBRUNEI(PB).).
Stable supply of methanol resource Stable supply of methanol resource
to Japan.to Japan.
The first project finance deal in The first project finance deal in
Brunei.Brunei.
Strengthen the twoStrengthen the two--way relationship. way relationship.
1818
Structure of Methanol ProjectStructure of Methanol Project
MGC
Brunei Economic
Development Board
Project CompanyBrunei Methanol Company
Offtaker
(MGC)
Government
Debt Senior
Lenders
JBIC
Land leaseConstruction
of plant
Private Financial
Institutions
Project Support
Equity
Gas Supply
O&M
Technical Support
Sponsor
EPC Contractor
Mitubishi Heary
Industries
Brunei Shell Petroleum
Escrow Account
Debt Senior
(Limited Recourse) Sales Revenue
1919
IV. Possibility of other risk IV. Possibility of other risk
controllcontroll
2020
Project Finance within the Project Finance within the
framework of Islamic Lawframework of Islamic Law
ShariShari’’ahah principles are:principles are:
The charging of interest (The charging of interest (ribariba) is prohibited.) is prohibited.
Profits should not be assured and therefore fixed Profits should not be assured and therefore fixed
returns on returns on investment should not be guaranteed.investment should not be guaranteed.
Speculation or gambling (Speculation or gambling (maisirmaisir) is prohibited.) is prohibited.
Transaction should be free from uncertainty, risk and Transaction should be free from uncertainty, risk and
speculation. speculation.
The existence of uncertainty (The existence of uncertainty (gharargharar) in a ) in a
contract is prohibited.contract is prohibited.
Absolute certainty of contract is required.Absolute certainty of contract is required.
, etc., etc.
2121
Project Finance within the Project Finance within the
framework of Islamic Lawframework of Islamic Law
However,However,
�� concept of taking commercial risks of a concept of taking commercial risks of a project directly is same as the project directly is same as the conventional concept of Project Finance.conventional concept of Project Finance.
Therefore,Therefore,
Route is different but Goal is same?Route is different but Goal is same?
the joining of Islamic Finance principles the joining of Islamic Finance principles with conventional finance principles, is with conventional finance principles, is achievable?achievable?
2222
Project Finance within the Project Finance within the
framework of Islamic Lawframework of Islamic Law
JBIC has not provided loan, based on JBIC has not provided loan, based on Islamic Law (i.e.: in accordance with Islamic Law (i.e.: in accordance with ShariShari’’ahah principles).principles).
In Recent transaction, In Recent transaction, inclidingincliding JBIC, JBIC, conventional lenders shared security conventional lenders shared security interests with Islamic lenders. interests with Islamic lenders.
explore the possibility in Asian Energy explore the possibility in Asian Energy Project.Project.
2323
ContCont’’d d -- JBICJBIC’’s view on PF within s view on PF within
the framework of Islamic Lawthe framework of Islamic Law
JBIC set up an Islam Task Force in 2005.JBIC set up an Islam Task Force in 2005.
JBIC set up JBIC set up ““ShariShari’’ah Advisory Groupah Advisory Group”” in 2006. in 2006. The purpose is The purpose is
(1) to conduct researches on Islamic Finance, (1) to conduct researches on Islamic Finance,
(2) (2) to disseminate related knowledge of Islamic to disseminate related knowledge of Islamic financing with Japanese private banks,financing with Japanese private banks,
(3)(3) to study possibility of potential finance by to study possibility of potential finance by way of Islamic Finance, andway of Islamic Finance, and
(4)(4) to send messages to Islam countries.to send messages to Islam countries.
2424
Cooperation with Asian ECACooperation with Asian ECA
The Asian EXIM Banks ForumThe Asian EXIM Banks Forum: since 1996, a forum : since 1996, a forum for discussion on collaborative efforts and for discussion on collaborative efforts and strategies regarding a broad range of issues.strategies regarding a broad range of issues.
The Tokyo ConsensusThe Tokyo Consensus: 9 Asian ECA signed on Nov. : 9 Asian ECA signed on Nov. 1010thth,2006.,2006. (1) the consolidation of regional energy security,(1) the consolidation of regional energy security, (2) the promotion of small(2) the promotion of small--and and mediummedium--sized sized enterprises(SMEsenterprises(SMEs) and ) and supporting supporting industries,industries, (3) partnerships among members to promote (3) partnerships among members to promote trade and investment with thirdtrade and investment with third--party countries,party countries, (4)(4) collaboration and outreach in human resource collaboration and outreach in human resource development.development.
2525
AppendixAppendix
2626
Mission of JBICMission of JBIC
MISSION OF JBIC:MISSION OF JBIC:
““JBIC has a statutory mandate to undertake JBIC has a statutory mandate to undertake lending and other operations for the promotion lending and other operations for the promotion of Japanese exports, imports and economic of Japanese exports, imports and economic activities overseas, for:activities overseas, for:
(a)(a) the stability of international financial order; the stability of international financial order;
(b)(b) economic and social development; andeconomic and social development; and
(c)(c) economic stability in developing economies, economic stability in developing economies,
thereby contributing to the sound development thereby contributing to the sound development of the Japanese economy, as well as the of the Japanese economy, as well as the international economy.international economy.””
2727
JBICJBIC--Capital,BudgetCapital,BudgetCapital:Capital:
-- International Financial Operations: 985.5 billion International Financial Operations: 985.5 billion
Yen (=USD8,496Mil.)Yen (=USD8,496Mil.)
-- Overseas Economic Cooperation Operations: Overseas Economic Cooperation Operations:
7,065.6 billion Yen (=USD60,910Mil.) 7,065.6 billion Yen (=USD60,910Mil.)
Budget (FY 2006):Budget (FY 2006):
-- International Financial Operations: 1,060 billion International Financial Operations: 1,060 billion
Yen (=USD9,138Mil.)Yen (=USD9,138Mil.)
-- Overseas Economic Cooperation Operations: Overseas Economic Cooperation Operations:
770 billion Yen770 billion Yen (=USD6,638Mil.)(=USD6,638Mil.)
Staff: Staff: 869869Note: Figures in US$ are calculated at Yen 116/US$.
2828
JBICJBIC--Operation ResultsOperation Results
47447455556216217272Profit Profit
98,51798,51711,4211,42
8868,10368,1037,9007,900
OutstandingOutstanding
(at FY2005(at FY2005--
end)end)
4,9144,91457057011,56011,5601,3411,341Commitment Commitment
(Loan, Equity, (Loan, Equity,
Guarantee)Guarantee)
US$ MillioUS$ Millio
nn\\ BillionBillion
US$ MillioUS$ Millio
nn\\ Billion Billion
ODAODAIFOsIFOs
Operation Results for the Fiscal Year 2005
Note: Figures in US$ are calculated at Yen 116/US$.
2929
JBICJBIC--Recent Project Finance Recent Project Finance
RecordRecord
Industry-wise Project Portfolio (committed)Industry-wise Project Portfolio (committed)Industry-wise Project Portfolio (committed)Industry-wise Project Portfolio (committed)
52%
15%
13%
9%
11%
Power
Mining
Manufacturing
Transportation/ Telecommunication/Water,etcOil&Gas
Region-wise Project Portfolio (committed)Region-wise Project Portfolio (committed)Region-wise Project Portfolio (committed)Region-wise Project Portfolio (committed)
37%
34%
4%
15%
4%4%
2%
Asia
Americas
Africa
Middle-East
Europe
CIS/Russia
Oceania
3030
DisclaimerDisclaimer
This presentation has been prepared by the Project This presentation has been prepared by the Project Finance Department of JBIC and is being shared with you Finance Department of JBIC and is being shared with you solely for solely for
Information purposes. Information purposes.
JBIC does not make any representation or warranty as to JBIC does not make any representation or warranty as to the accuracy or completeness of this information.the accuracy or completeness of this information.
These presentation materials may not be reproduced or These presentation materials may not be reproduced or disclosed to any person or entity in whole or in part, or disclosed to any person or entity in whole or in part, or used for any other purposes (except for this discussion used for any other purposes (except for this discussion today), without the prior written consent of JBIC.today), without the prior written consent of JBIC.