Provision of Yen Loan to Iraq (Prior Notification)

December 11, 2006

  1. The Government of Japan has announced its intention to provide yen loans up to the total amount of 82,644 million yen to Iraq for implementing "Crude Oil Export Facility Rehabilitation Project" and "Electricity Sector Reconstruction 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) Crude Oil Export Facility Rehabilitation Project: 50,054 (million yen)
    • (2) Electricity Sector Reconstruction Project: 32,590 (million yen)
  3. Terms and conditions of the loans:
    • (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 Projects
    (1) Crude Oil Export Facility Rehabilitation Project
    In Iraq, the oil sector, which occupies almost 70% of its GDP and almost 90% of the national income, is the largest key industry and almost the single source to gain foreign currency. However, because of the insufficient reinforcement and maintenance of oil related facilities, the reliance of export facilities decreases and the capacity of the crude oil export is unstable, resulting from conflicts including Iran-Iraq War and the Gulf War, and economic sanctions .
    Therefore, it is necessary to construct an on-shore/off-shore pipeline to export oil from a storage equipment in Al-Fao, Basra in the Southern Iraq, and to install off-shore loading facilities in order to operate oil export facilities stably and to increase the capacity of them.
    (2) Electricity Sector Reconstruction Project
    The electricity sector is the basis of any economic and social activities in Iraq. However, the function of power supply and distribution has been greatly deteriorated by insufficient new investment and maintenance for the power sector resulting from conflicts including Iran-Iraq War and the Gulf War, and economic sanctions.
    Therefore, by supplying the machinery and materials for the transformation in the power supply and distribution section, this project aims to stabilize the power supply mainly targeting the areas with high priority from the view points of the necessity, the feasibility of operation, and the effect of the project in Iraq.

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