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Provision of Yen Loan to Iraq (Prior Notification)

March 28, 2006

  1. The Government of Japan has announced its intention to provide yen loans up to the total amount of 76,489 million yen to Iraq for implementing the following projects: "Port Sector Rehabilitation Project", "Irrigation Sector Loan" and "Al-Mussaib Thermal Power Plant Rehabilitation Project". After prior notification to the Iraqi side and after the inauguration of the new Government of Iraq, the Exchange of Notes will be signed regarding the provision of these loans.
  2. Projects and the maximum amount of the loans
    • (1) Port Sector Rehabilitation Project: 30,211 million yen
    • (2) Irrigation Sector Loan: 9,514 million yen
    • (3) Al-Mussaib Thermal Power Plant Rehabilitation Project: 36,764 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 Projects
    • (1) Port Sector Rehabilitation Project
      The rehabilitation of Port Umm-Qasr, the most important port of Iraq, is an urgent challenge in reconstructing the economy and the society of Iraq. However, the port functions are greatly impaired by insufficient investment, operation and maintenance resulting from the conflicts including the Iran-Iraq War and the Gulf War and from economic sanctions.

      Therefore, by dredging the port and its surrounding shipping lanes, removing wrecked ships, and rehabilitating the port facilities, as well as by providing equipment and materials such as dredgers and other items, this project aims to reconstruct the Port of Umm-Qasr, and its function as the transportation and distribution network hub.
    • (2) Irrigation Sector Loan
      Agriculture, an important industry of Iraq, accounts for about 10 percent of the non-oil sector GDP and about 10 percent of all working population. Irrigation is indispensable in the central and southern parts of the country, which lie mainly in a dry climate region. However, irrigation facilities are deteriorating because of poor operation and maintenance resulting from conflicts including the Gulf War and from economic sanctions. Conflicts and droughts have also brought decreased agricultural production.

      Therefore, by providing irrigation drainage pumps, and equipment and materials for maintaining the operation of irrigation channels in some sites where agriculture is important, including in the Governorate of Al-Muthanna, this sector loan aims to improve the agricultural production and increase employment in Iraq.
    • (3) Al-Mussaib Thermal Power Plant Rehabilitation Project
      Securing enough electric power is essential for the reconstruction of the economy and for the recovery of social stability in Iraq. However, the power generation function has been greatly deteriorated by insufficient investment, operation and maintenance for the power sector resulting from the conflicts including the Gulf War and from economic sanctions.

      Therefore, by rehabilitating the existing Al-Mussaib thermal power plants (the unit 1 and 3), which is located in the suburbs of Baghdad, this project aims to improve the power supply mainly targeting Baghdad.
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