Project Finance for the Largest Solar Power Generation Project in Jordan: Contributing to power diversification and climate change mitigation
The Japan International Cooperation Agency (JICA) signed a loan agreement with Baynouna Solar Energy Company (“BSEC”), a special purpose company owned by Abu Dhabi Future Energy Company (“Masdar”) and Taaleri for a solar power generation project in Jordan. The loan is co-financed by the International Finance Corporation (“IFC”), DEG [1] and the OPEC Fund for International Development.
Under the project, BSEC will construct and operate a 200-megawatt solar power plant in Al-Muwaqqar District, Amman Governorate, which will be the largest photovoltaic (PV) plant in Jordan. The project will promote the diversification of power sources and is expected to save 360,000 tons of carbon dioxide per year.
Jordan faces a tight supply-demand balance in power with a total power production of 19,498 gigawatt-hours compared to 16,843 gigawatt-hours consumed in 2016. Because the power demand is predicted to rise by four to five percent per year while existing power production facilities are deteriorating, continuous power development is essential. Since Jordan relies on imports for 97 percent of its energy sources and is easily influenced by fluctuating fuel prices, the government is promoting an increase in the generation capacity of renewable energy with a target of up to 20 percent by 2020.
Jordan has accepted a large number of refugees from nearby countries, including approximately 650,000 refugees from Syria in the wake of the 2011 Syrian conflict, as well as refugees from Palestine and Iraq. With the additional need to accommodate the increased demand for power arising with the influx of refugees, the Government of Jordan is expediting the development of renewable energy. Many of the refugees live in host communities in urban areas, and the solar power plant constructed by the project will supply power to those host communities. This is in accord with Japan’s assistance policies to stabilize the Middle East and strengthening support for countries and communities that accept refugees, which were announced by the Government of Japan at the G7 Ise-Shima Summit (May 2016), the World Humanitarian Summit (May 2016) and the 71st Session of the United Nations General Assembly (September 2016).
JICA has supported the introduction of an automatic tariff adjustment system linked to energy prices through the Financial Sector, Business Environment and Public Service Reform Development Policy Loan (2016, [2]), and formulation of an optimal power supply plan through the Study on Electricity Sector Master Plan in The Hashemite Kingdom of Jordan (2014–2017, [3]). JICA will continue providing support to Jordan in the energy sector while proactively promoting partnerships with the IFC and other international financial institutions, and advancing the formation of projects for socioeconomic development in developing countries and regions.
The project is the second co-financing project based on a memorandum of cooperation [4] signed between the IFC and JICA in May 2017 to promote efficient co-financing projects for the private sector in developing countries.
Source: jica.go.jp
