Provision of Yen Loan to Iraq

January 11, 2007

1. The Government of Japan has announced its intention to provide yen loans up to the total amount of 79,837 million yen to the Republic of Iraq for implementing the following projects: "Port Sector Rehabilitation Project", "Irrigation Sector Loan", "Al-Mussaib Thermal Power Plant Rehabilitation Project" and "Samawah Bridges and Roads Construction Project". Notes to this effect were exchanged on January 10 (Wed) in Baghdad between Mr. Hisao Yamaguchi, Japanese Ambassador to Iraq, and Mr. Baker Jabr Al-Zubaidy, Minister of Finance of the Republic of Iraq.
   
   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
   (4) Samawah Bridges and Roads Construction Project: 3,348 million yen

   Total 79,837 million yen

2. 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 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.

   (4) Samawah Bridges and Roads Construction Project

   Development of transportation network is an urgent challenge in reconstructing the economy and the society of Iraq. However, National Road No.1, which connects north and south, has an undeveloped section, causing heavy traffic congestion in its detour route, National Road No.8, at downtown Samawah where it crosses the Euphrates.
   Therefore, by constructing a new bridge (Samawah North Bridge), rebuilding provisional bridges (Mahdi Bridge and Hillal Bridge) to cross over the Euphrates and constructing their connecting roads in Al-Samawah and its vicinity, this project aims to alleviate traffic congestion and envisage efficient north-south transportation.

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

Related Information (The Issue of Iraq)