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Financing Opportunity for Japan-India Collaboration Projects

Financing Opportunity for Japan-India Collaboration Projects. Japan Bank for International Cooperation (JBIC) New Delhi Office April 16, 2010. Introduction. Japan Bank for International Cooperation (JBIC) is a Japanese Government Financial Institution.

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Financing Opportunity for Japan-India Collaboration Projects

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  1. Financing Opportunity for Japan-India Collaboration Projects Japan Bank for International Cooperation (JBIC) New Delhi Office April 16, 2010

  2. Introduction • Japan Bank for International Cooperation (JBIC) is a Japanese Government Financial Institution. • JBIC conducts its operations with a mission to contribute to the sound development of the Japanese and international economy. • JBIC, has made a new start since October 1, 2008, as the international wing of Japan Finance Corporation (JFC), Japan’s policy-based financing institution.

  3. Export-Import Bank of Japan (JEXIM) Overseas Economic Cooperation Fund (OECF) Overview of Organizational Restructuring October 2008 Japan Finance Corporation (JFC)* October 1999 （Notes 1, 2） JBIC （International Finance） International Finance Operation (“IFO”) National Life Finance Corporation Agriculture, Forestry and Fisheries Finance Corporation （Domestic Finance） Japan Finance Corporation for Small and Medium Enterprise （Crisis Response） ODA Operation (Note 1)Established based on the “Japan Finance Corporation* Law” (Note 2) Okinawa Development Finance Corporation will be merged into JFC* in FY2012 or later. Japan International Cooperation Agency (New JICA) ODA: Official Development Assistance Technical Assistance ODA Loan Grant Assistance

  4. New JBIC’s Mission (1) Supporting and promoting overseas operation of Japanese companies (2) Supporting development and acquisition of important natural resources to Japan (3) Corresponding to financial turmoil in the international economy

  5. Relations: India & Japan (“JP”)－ Japanese Company in India － (1) Number of Japanese Companies in India (2) Number of JCCII Member Companies (JCCII: Japan Chamber of Commerce and Industry in India) (Source: Embassy of Japan) (Source: JCCII) (3) Existence of JP Companies by States (4) Type of Business JP Companies

  6. Relations: India & Japan (“JP”)－ Japanese Investors’ View － Survey: Promising Countries for overseas business of JP Companies [ Reasons & Pending Issues ] (Source: Survey Report on Overseas Business Operations by JBIC)

  7. Relations: India & Japan (“JP”)－ CDM Projects in India － (1) Number of UN Registered CDM (2) Breakdown of Indian Registered CDM (463) (Source: IGES)

  8. JBIC Financing Menu (1) Export Loan • Funding to imports from Japan as per OECD guidelines (2) Overseas Investment Loan • Funding to Japanese subsidiaries & joint ventures in India (3) Untied Loan & Guarantees • Funding to projects improving investment climate for Japanese companies in India (4) Equity Investment • Capital Contribution to Infrastructure or Eco-Friendly Projects where Japanese companies participate

  9. Co-Financiers 60% 40% (1) Export Loan - Export Loan through SBI or ICICI- Loan Credit Line (JPY or USD) State Bank of India (SBI)($70mil) ICICI Bank ($100mil) Indian company Indian Company imports Machinery, Equipments, etc.from Japanese Company Approach and arrange the finance Export Export Export Insurance Japanese Company

  10. Financial Coverage If the contract value is 160 (foreign portion is 100 and local cost is 60), maximum financial coverage is 115. Down payment = 15 (100 X 15%) 15 Foreign Portion 100 X 85% = 85 100 Local Cost 30 100 x 30% = 30 60 Financial Coverage by export loan = 115 Features - Export Loan - • Eligible Borrower: All Indian companies that are importing capital goods & services from Japanese companies • Borrowing Amount: Up to 85% of Foreign Export Portion • Local expenditure can also be financed as part of overall contract, not exceeding 30% of export portion.

  11. Features - Export Loan - • Down Payment: 15% of Foreign Portion Repayment Period: up to 10 years • Currency: Japanese Yen or US Dollar • Interest Rate : • CIRR + OECD Risk Premium + SBI/ICICI Margin *1: CIRR (Commercial Interest Reference Rate): Interest rate applied to Officially Supported Export Credit as per OECD Guidelines, which will change on 15th of each month *2: OECD Risk Premium: To be calculated based on repayment terms, CIRR rate etc. according to OECD Guidelines *3: SBI/ICICI Margin: Only applied to Global Bank Loan (SBI/ICICI two step loan) • Environment: JBIC Environmental Guidelines

  12. (2) OverseasInvestment Loan Indian Company Japanese Company Operation Equity Equity/Subsidiary Joint Venture Company Co-Financiers CAPEX Loan ($/\/€) J B I C Factory

  13. Features - Overseas Investment Loan - • Eligible Borrower: JV company between Indian company & Japanese company, or Subsidiary of Japanese company • Loan Amount: Depends on the Project & Cash flow • Tenor: Long Term (more than 1 year), depends on Cash flow • Repayment Period: Determined by taking account of Cash flow • Currency: Japanese JPY, USD or Euro

  14. (3)Untied Loan - DMIC / Project Development Fund (PDF) - JBIC Loan（$75Million） Guarantee Govt. of India IIFCL *2 Fund PDF Account （$75million） Transfer the Loan to PDF Account DMIC DC*1 Project Development Fund (PDF) ＜Project Outline＞ -Establish SPVs to take all necessary permissions for DMIC Project Developments. -Sell out SPVs to Project Developers. INDIA ACCOUNT ($75million) JAPAN ACCOUNT ($75million) Utilize funds to conduct Feasibility Study (F/S) for prospective projects Payment for sales of SPVs Submit F/S Report Sell out SPVs Consultant Project Developers ＊１: Delhi Mumbai Industrial Corridor Devlpt. Corp. ＊２：IIFCL： India Infrastructure Finance Company Ltd.

  15. (3)Untied Loan (Guarantee) - NTPC / Power Generation Project - （$380million） N T P C Private Banks Syndicated Loan Barh (Stage-I) Super Thermal Power Project in Bihar J B I C Guarantee Supply Electricity to Japanese CompanyComplexes

  16. (3)Untied Loan - ICICI Bank / Supporting Industry Loan - Local JP Company Japanese Company Components Supply JV Co. Local JP Company Indian Company （Supporting Industry） Co-Financiers CAPEX Loan($/\) Factory ICICI Bank J B I C Credit Line $350million (Equivalent amount JPY)

  17. (3)Untied Loan - ICICI Bank / CDM Loan - Co-Financiers ICICI Bank Credit Line ($/\) Loan ($/\) $200 million (Equivalent amount JPY) J B I C CDM Project Company Sales of CER CAPEX JP Company CDM Project

  18. (3)Untied Loan(Corresponding to International Financial Turmoil) - ICICI Bank / Trade Finance Support Loan- Third Country Company （Importer） Third Country Company （Exporter） Trade Supporting India’s Trade Transactions Trade Indian or Local JP Company (Exporter) Indian or Local JP Company (Importer) Trade Finance Trade Finance J B I C ICICI Bank Loan($) Trade Finance （$100million）

  19. (4) Equity Invest. / FACE Scheme（Facility for Asia Cooperation and Environment） Equity Private Banks Energy Efficiency Fund１ ProjectA,B,C・・・ Equity/Loan Equity Energy Efficiency Fund２ ProjectA,B,C・・・ Equity Equity ProjectA,B,C・・・ Asia Infra. Fund１ J B I C Equity Asia Infra. Fund2 Guarantee ProjectA,B,C・・・ Private Banks Energy Conservation Project Loan Projects in Asia （Infrastructure & Energy）

  20. (4) Equity Invest. / FACE Scheme（Outline of FACE） • To mobilize private capital by using JBIC’s equity participation and guarantee functions. • To support the projects politically important to Japan in view of the G8 Hokkaido Toyako Summit : (1) projects contributing to mitigating climate change (including for energy efficiency, renewable energy, etc.); and (2) projects in Asia. Objectives Period FY2008-2012 (April 2008-March 2013) To fund this facility, JBIC is to receive 20 billion yen to its International Financial Operation account from the Japanese government’s Fiscal Loan Fund Special Account (investment account). Funding

  21. (4) Equity Invest. / FACE Scheme（FACE Applicable Condition） • Japanese Company’s Equity Participation in the Project, or • Japanese Company’s Equity Participation in Foreign Companies for Business Alliance, or • Japanese Company’s Equity Participation in Funds (Operation & Investment Policy should be lead by Japanese General Partner in the Funds), or • Japanese consortium’s Equity Participation in International Funds Japanese Company’s Participation Developing Country only (In case of Natural Resource Finance, Developed Country is covered) Country • Less Capital Contribution Ration than Japanese Biggest Shareholder, and • Less than 25% JBIC’s Equity Participation

  22. Private Financial Institutions New Finance Initiative -GREEN-(Global action for Reconciling Economic growth & Environment conservation) • JBIC supports environmental investments in Solar Power, Energy-Efficient Power Plant,Energy-Saving Equipment, etc.for global environment conservation, utilizing advanced environment technologyin developing countries • Supports through Loans or Equity Investments. J B I C Loans / Equity Investment MDBs （ADB, World Bank Group, etc） Catalytic Role Co-operation (Co-finance, Information Sharing, etc) Loan, etc Loan, etc • Applicable Business (Applicable Conditions) • Projects for Global Environment Conservation (e.g. Projects contributing to significant reduction of Greenhouse Gas Emissions) • Projects agree to “MEASURE” the effect, “REPORT” the effect to JBIC and accept the “VERIFICATION” of the effect by JBIC.

  23. New Finance Initiative -GREEN-(Global action for Reconciling Economic growth & Environment conservation) • Main Targeted Sectors • Renewable Energy • Solar, Wind, Hydro, Geothermal, Biomass Energy, etc • Energy Conservation • Industrial Sector; Modernization and Heat Recovery in Steel, Cement, Chemical, Nonferrous Metal and Paper & Pulpsectors, etc • Power Sector; Clean Coal / Gas-Fired / Biomass Power, Rehabilitationof Power Plant, Cogeneration,Fuel Battery, Smart Grid, etc • Transport Sector; Urban Transportation • Civilian Sector; ESCO (Energy Service Co.), Introduction of Energy Saving Appliance, etc • Water Treatment; Water Purification and Supply, etc • Other Greenhouse Gas Emission Reduction Projects • Methane/CFC Emission Reduction, Nitrous Oxide Degradation, etc

  24. Recent Activity in India

  25. Financing Opportunity for Japan-India Collaboration Projects Thank you very much Mr. Hiromichi Miyamoto, Representative, Ms. Deepa Salvan, Int’l Financial Specialist Japan Bank for International Cooperation, New Delhi Office 1st Floor, Metropolitan Hotel New Delhi, Bangla Sahib Road, New Delhi-110 001 Tel : +91-11-4352 2900, Fax: +91-11-4352 2950 Email: h-miyamoto@jbic.go.jp

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