Provision of Yen Loan to Iraq (Prior Notification)

October 23, 2006

  1. The Government of Japan has announced its intention to provide yen loans up to the total amount of 20,199 million yen to Iraq for implementing "Engineering Services for Basrah Refinery Upgrading Project" and "Khor Al-Zubair Fertilizer Plant Rehabilitation Project." After prior notification to the Iraqi side, the Exchange of Notes will be signed regarding the provision of these loans.
  2. Projects and the maximum amount of the loans
    • (1) Engineering Services for Basrah Refinery Upgrading Project: 2,079 (million yen)
    • (2) Khor Al-Zubair Fertilizer Plant Rehabilitation Project: 18,120 (million yen)
  3. Terms and conditions of the loan:
    • (1) Interest rate: 0.75%
    • (2) Repayment period: 40 years (including a 10-year grace period)
    • (3) Procurement method: general untied
  4. Outline of the Project
    • (1) Engineering Services for Basrah Refinery Upgrading Project
      In Iraq, oil sector, which occupies almost 70% of its GDP and almost 90% of the national income, is the largest key industry. However, increase of consumers' demand for oil product during postwar reconstruction inflicted shortage of gasoline. This shortage is also caused by poor operation and maintenance of related facilities for oil products, resulting from conflicts including the Gulf War and from economic sanctions.
      Therefore, it is necessary to increase yield of oil products for consumers by constructing a new plant which will contribute to increasing the productivity in refining gasoline and other oil products in the existing Basrah Refinery.
      This yen loan is intended for engineering services for the design and management of constructing the new plant.
    • (2) Khor Al-Zubair Fertilizer Plant Rehabilitation Project
      Agriculture, an important industry of Iraq, accounts for about 10 percent of GDP and about 10 percent of all working population. Two factories are in operation for production of fertilizer which supports the Iraqi agriculture. However, the production of fertilizer is decreasing due to poor operation and maintenance of factories, resulting from conflicts including the Gulf War and from economic sanctions. In particular, Kohr Al-Zubair Fertilizer Plant, located in Basrah Governorate in Southern Iraq, faces the problem of decreasing production capacity due to the dilapidated facilities of the factory.
      Therefore, it is crucial to supply the necessary machinery in urgent needs for the factory, in order to improve its production capacity and to recover productivity of agriculture therefrom.
(END)


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