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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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slide1

Financing Opportunity for Japan-India Collaboration Projects

Japan Bank for International Cooperation (JBIC)

New Delhi Office

April 16, 2010

introduction
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.
slide3

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

new jbic s mission
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

relations india japan jp japanese company in india
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

slide6

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)

slide7

Relations: India & Japan (“JP”)- CDM Projects in India

(1) Number of UN Registered CDM

(2) Breakdown of Indian Registered CDM (463)

(Source: IGES)

jbic financing menu
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
1 export loan export loan through sbi or icici

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

features export loan

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.
features export loan11
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
2 overseas investment loan
(2) OverseasInvestment Loan

Indian Company

Japanese Company

Operation

Equity

Equity/Subsidiary

Joint Venture Company

Co-Financiers

CAPEX

Loan ($/\/€)

J B I C

Factory

features overseas investment loan
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
3 untied loan
(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.

3 untied loan guarantee
(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

3 untied loan16
(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)

slide17

(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

slide18

(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)

4 equity invest face scheme facility for asia cooperation and environment
(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)

4 equity invest face scheme outline of face
(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

4 equity invest face scheme face applicable condition
(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

slide22

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.
slide23
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
slide25

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