3—oda loan operations in individual countries - jica · 8 – – oda loan operations in...

8 – � – ODA Loan Operations in Individual Countries

JBIC conducts ODA loan operations effectively and efficiently based on the Medium-Term Strategy (from April 2005 toMarch 2008), which set forth the basic approach, thematic priority areas and priority regions. ODA loan commitments inFY2005 amounted to ¥569.8 billion for 50 projects.

1—ODA Loan and Operations in FY2005

3—ODA Loan Operations in Individual Countries

3 —South Asia� India (See p. 14)

Purulia Pumped Storage Project (III)Bangalore Water Supply and Sewerage

Project (II-2)Rural Electrification ProjectDelhi Mass Rapid Transport System

Project (Phase 2) (I)Bangalore Metro Rail ProjectSwan River Integrated Watershed

Management ProjectOrissa Forestry Sector Development

ProjectHussain Sagar Lake and Catchment

Area Improvement ProjectKolkata Solid Waste Management

Improvement ProjectVisakhapatnam Port Expansion Project (E/S)

� Pakistan (See p. 14)Lower Chenab Canal System

Rehabilitation ProjectLoad Dispatch System Upgrade ProjectEmergency Earthquake Recovery Loan

� Sri Lanka (See p. 15)Vavuniya-Kilinochchi Transmission Line

ProjectSri Lanka Tsunami Affected Area

Recovery and Takeoff (STAART) ProjectGalle Port Development Project (I)Tourism Resources Improvement Project

(TRIP)Pro-Poor Eastern Infrastructure

Development Project

5 —Africa� Algeria (See p. 16)

Earthquake-Affected Education Sector Reconstruction Project

� Egypt (See p. 16)Kuraymat Integrated Solar Combined

Cycle Power Plant Project

� Morocco (See p. 17)Sewerage System Development ProjectRural Electrification Project (III)Marrakech–Agadir Motorway

Construction Project

� Tunisia (See p. 17)Borj Cedria Science and Technology Park

Development ProjectPhotovoltaic Rural Electrification and

Water Supply Project

� Senegal (See p. 18)Road Improvement and Transport

Facilitation Program on the SouthboundBamako-Dakar Corridor under EPSA forAfrica

1 —East Asia� Mongolia (See p. 10)

Two-Step-Loan Project for Small andMedium-Scaled Enterprises Developmentand Environmental Protection

4 —Central Asia and the Caucasus� Azerbaijan (See p. 15)

Shimal Gas Combined-Cycle Power PlantConstruction Project (Second Unit)

Mongolia

Sri Lanka

India

Azerbaijan

Indonesia

Thailand

Malaysia

Cambodia

PakistanEgypt

Algeria

Morocco

Senegal

Tunisia

Viet Nam

ODA Loan Operations in Individual Countries – � – 9

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By region, while Asia continued to have a dominant 83% share of the total loan commitments, Africa increased its sharefrom 1% in the previous year to 9%. ODA loan commitments in FY2005 are as shown below.

2 —Southeast Asia� Cambodia (See p. 11)

Sihanoukville Port SEZ Development Project (E/S)

� Indonesia (See p. 11)Engineering Services for Kamojang

Geothermal Power Plant ExtensionProject

Tanjung Priok Access Road Construction Project (II)

Asahan No. 3 Hydroelectric Power PlantConstruction Project

Integrated Water Resources and Flood Management Project for Semarang

Professional Human Resource Development Project (III)

Development Policy Loan (II)

� Malaysia (See p. 12)Higher Education Loan Fund Project (III)

� Thailand (See p. 12)Second Bangkok International Airport

Development Project (VII)

� Viet Nam (See p. 13)Second Ho Chi Minh City Water

Environment Improvement Project (I)Ninh Binh II Thermal Power Plant

Construction Project (II)Nhat Tan Bridge (Vietnam-Japan

Friendship Bridge) ConstructionProject (I)

Red River Bridge Construction Project (IV)Second Hanoi Drainage Project for

Environmental Improvement (I)Higher Education Development

Support Project on ICTPhan Ri–Phan Thiet Irrigation ProjectSmall-Scale Pro-Poor Infrastructure

Development Project (II)Regional and Provincial Hospital

Development ProjectFourth Poverty Reduction Support

Credit

6 —Latin America and the Caribbean

� Costa Rica (See p. 18)Metropolitan San Jose Environment

Improvement Project

� Guatemala (See p. 19)ZONAPAZ Road Improvement

Project

� Paraguay (See p. 19)Yguazu Hydropower Station

Construction Project

Guatemala

Costa Rica

Paraguay

Per capita GDP in Mongolia is US$606 (in 2004), with36% of its population living in poverty. By supporting sus-tainable growth of SMEs that play an important role in thecountry’s economic development, the project is alsoexpected to contribute to poverty reduction.

aODA loan commitments during FY2005: ¥2.98 billion for 1 project


1 A two-step loan is a loan extended to a development finance institution in the recipient country, which, in turn, will on-lend the loan funds to domestic SMEs.

2—ODA Loan Operations in Individual Countries

Mongolia

East Asia

Supporting SMEs’ capital investment to improve the environ-ment will serve to curb air pollution.

In Ulaanbaatar where temperatures drop to –40 degreesCelsius point in winter, the burning of raw coal for heatinghas caused serious air pollution.

During FY2005, ODA loan operations focused on Asia as well as thematic priority areas in accordance with the Medium-Term Strategy (from April 2005 to March 2008). ODA loan commitments in FY2005 for individual countries are as follows.

Since its shift to a democratic system in 1990, Mongoliahas maintained stable fiscal and balance-of-payments posi-tions, achieving 10.6% real GDP growth in 2004. Asprogress has been made toward a market-oriented econo-my, many small and medium enterprises (SMEs) thatsprung up have played an increasingly important role ineconomic development and employment creation.However, lack of capacities of the local banks to providecredit and high loan interest rates have brought a shortageof long-term financing for SMEs.

JBIC thus provided an ODA loan for the Two-Step-Loan1

Project for Small and Medium-Scaled EnterpriseDevelopment and Environmental Protection. The projectwill supply long-term loans to SMEs in the manufacturingand other sectors through five domestic banks. JBIC willcooperate with the Japan International CooperationAgency (JICA) to provide a training program on manage-ment, financing, and other subjects for enhancing capaci-ties of SMEs to undertake their business projects as well ascapacities of the domestic banks to provide credit.Furthermore, the two-step loan covers SMEs’ capital invest-ment for environmental improvement, including for man-ufacturing of the fuel that reduces emission of pollutants.The loan will therefore help curb increasing air pollution inthe capital city of Ulaanbaatar.


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1 The Clean Development Mechanism (CDM) allows industrialized countries to undertake joint projects that reduce GHG emissions with developing countries.The investor countries (industrial countries) may use GHG emission reductions generated from these projects to meet their own emissions reduction targets.

Cambodia

Southeast Asia

Positive steps toward a market-oriented economy, includ-ing accession to the World Trade Organization (WTO) inOctober 2004, have enabled Cambodia to achieve 5–7%growth in recent years. Despite this progress, the legal andregulatory framework and administrative procedures areyet to be adequately developed to meet the needs of a full-fledged member of the international community. Theyconstitute part of the bottlenecks to foreign direct invest-ment (FDI) inflows, which remain one-tenth of those inViet Nam. While the population of the younger generationis increasing rapidly, their employment opportunities arelimited. Cambodia’s poverty rate has reached 35%, and percapita GDP remained US$350 in 2004, which were the lowest levels among the ASEAN member countries.Accordingly, the Cambodian government has planned todevelop a special economic zone to attract FDI by emulatingsuccessful examples of the neighboring countries.

Against this background, JBIC provided an ODA loan forthe Sihanoukville Port SEZ Development Project (E/S) (seep. 24). Under this project, a special economic zone (SEZ)with an area of about 70 hectares will be developed adja-cent to Sihanoukville Port. The ODA loan will finance engi-neering service including design, and consulting service forinstitutional improvement including enhancement ofadministrative capacity and development of the legal andregulatory framework.

In partnership with the World Bank and JICA, the projectwill support capacity enhancement of the staff working forattracting FDI and help create a “one-stop service” for pre-viously cumbersome administrative procedures, therebyimproving inefficient administrative service.

aODA loan commitments during FY2005:¥ 318 million for 1 project

Indonesia

Power generation with renewable geothermal energy

The new government formed by President Yudhoyono hasbeen striving to ensure macroeconomic stability, improvethe investment climate, enhance public financial manage-ment and reduce poverty. Following its policy, JBIC sup-ports economic infrastructure development that helpsimprove the investment climate as one of its priority areas.

In FY2005, ODA loans were provided for four economicinfrastructure development projects. Of these, theEngineering Service for Kamojang Geothermal Power PlantExtension Project and the Asahan No. 3 HydroelectricPower Plant Construction Project, undertaken to meetgrowing power demand and ensure stable power supplies,will also help reduce greenhouse gas (GHG) emissions.Therefore, their application for Clean DevelopmentMechanism (CDM) to the projects is being consideredunder the Kyoto Mechanisms.1 The Tanjung Priok AccessRoad Construction Project (II) (see p. 25) aims to improvethe arterial road that will serve as a major road transportroute. Since its implementation draws on Japanese exper-tise on construction, Special Terms for EconomicPartnership (STEP) (see p. 5) apply to the loan for this pro-ject. In the Integrated Water Resources and FloodManagement Project for Semarang, an ODA loan supportslong-term and comprehensive water resource management,including flood control and exploitation of water resources.

Since 1999, the Indonesian government has embarkedon decentralization. An ODA loan was provided for theProfessional Human Resource Development Project (III)(see p. 34) to support human resource development inprovincial governments. It will fund the enrollment oftheir staff involved in policy planning and local publicfinance management in advanced academic programs indomestic institutions as well as their study in Japan.

In addition to project type loans, JBIC provided theDevelopment Policy Loan (II), a program loan to supportinstitutional reforms to improve the investment climate.

aODA loan commitments during FY2005:¥93.01 billion for 6 projects


Malaysia

The recent external environment surrounding theMalaysian economy has become ever more challenging. Inparticular, the manufacturing industry, which has been dri-ving force of the economic growth, is under growing pres-sure to increase value-added and productivity. There is thusan urgent need to develop human resources equipped withadvanced technology.

To address this situation, JBIC provided an ODA loan forthe Higher Education Loan Fund Project (III). The projectsupports Malaysian students for studying science and engi-neering in Japanese universities and graduate schools. Aswas the case in the previous phase, this third phase of theproject will also implement a twinning program where students will be enrolled in Japanese universities aftercompleting some course work in a domestic university.

The third phase has also extended the domestic programfrom two to three years. During this period, UniversitiIndustri Selangor, a science and technology university inMalaysia, offers courses on advanced specialized subjects,and diplomas1 are conferred on the students who havecompleted the domestic program. In addition, with thecooperation of Japanese universities involved in the firstand second phases, the twinning program will be imple-mented, the domestic curriculum will be developed andthe teaching staff will be dispatched.

In the first and second phases, more than 600 Malaysianstudents completed study in Japan, and many graduates aresuccessfully working as engineers in manufacturing indus-tries such as the electric and electronics industry, includingJapanese affiliates. JBIC will continue to support humanresource development tailored to local needs in partnershipwith Malaysian industry, while keeping its sights set on sus-tainable economic growth.

aODA loan commitments during FY2005:¥7.64 billion for 1 project

With economic growth and development of the tourism inThailand, air passengers and cargo volume in the BangkokInternational Airport (Don Mueang International Airport)have steadily increased over the years. While ever-increas-ing air traffic as a hub airport in Southeast Asia calls forcapacity expansion, its location has placed limits on theairport facilities.

JBIC provided an ODA loan for the Second BangkokInternational Airport Development Project (VII) to supportthe construction of a new airport. Previously, six ODA loansfunded this project, starting from FY1996. This seventh loansupports the final phase of the project. The proceeds of theloan will be used for construction of a passenger terminal,civil works for runways and consulting service.

The new airport is located in Nong Ngu Hao, SamutPrakan Province, 30 kilometers east of Bangkok. Uponcompletion, the airport can handle 45 million passengersand 2.12 million tons of air cargo annually. The new air-port with its two runways stretching from east to west willserve as a new gateway to the Mekong Basin countries as ahub airport in Southeast Asia. At the same time, it will helpdevelop urban infrastructure and contribute to economicdevelopment in Thailand.


The passenger terminal and the control tower at the almost completed SecondBangkok International Airport.

Thailand

1 This diploma is equivalent to a degree granted in a junior college in Japan.

Welcome party for Malaysian students who came to Japan for studying under thesecond phase of the project


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Improve the living environment through improvement in the drainage in Ho Chi Minh City

The Nhat Tan Bridge (Viet Nam-Japan Friendship Bridge) upon completion(Artist’s drawing)

Viet Nam

Since the Doi Moi policy was adopted in 1986, theVietnamese economy has continued to grow 7% annually,largely driven by increasing exports and inflows of foreigndirect investment. For this reason, the country is drawingincreasing attention from Japanese firms as a promisingdestination for their investment. Despite this progress,about one quarter of the total population cannot earn ade-quate income for obtaining basic nutrition, and disparitiesbetween urban and rural areas are increasing. Takingaccount of this situation, JBIC has placed priority of itsfinancial assistance on economic infrastructure develop-ment that will serve to promote sustainable economicgrowth and strengthen international competitiveness; onimproving the living environment in urban areas; and onreducing regional disparities and poverty.

In FY2005, ODA loans for economic infrastructure pro-jects supported the Nhat Tan Bridge (Viet Nam-JapanFriendship Bridge) Construction Project (I) and the RedRiver Bridge Construction Project (IV) to construct bridgesand ring roads that will serve as major cargo transportroutes in the vicinity of Hanoi. An ODA loan also support-ed the Ninh Binh II Thermal Power Plant ConstructionProject (II) to meet sharply increasing power demand inHanoi and northern Viet Nam.

Furthermore, to improve the deteriorating urban envi-ronment caused by rapid urbanization and industrializa-tion, ODA loans supported the Second Hanoi DrainageProject for Environmental Improvement (I) and the SecondHo Chi Minh City Water Environment ImprovementProject (I). These projects seek to improve the living envi-ronment in urban areas through improvements in thedrainage and sewerage systems in both cities.

The Fourth Poverty Reduction Support Credit, a programloan cofinanced with the World Bank and other agencies,supported policy and institutional reforms for povertyreduction. The Phan Ri–Phan Thiet Irrigation Project,which will develop irrigation and drainage facilities insouthern Viet Nam, and the Small-Scale Pro-PoorInfrastructure Development Project (II) (see p. 20), whichwill develop small-scale infrastructure in remote andmountainous areas, will contribute to improving economicunderpinnings and basic living conditions for populationsliving in remote local communities. The Regional andProvincial Hospital Development Project aims to improvemedical service delivery in the targeted regions.

The Higher Education Development Support Project onICT (see p. 35), which was the first financial support pro-vided for the educational sector in Viet Nam, supportshuman resource development in the rapidly growing IT sec-tor, thereby producing experts with advanced knowledgewho will serve as a bridge connecting Japanese andVietnamese IT industries and educational communities.



India

implement rural electrification in three states of southernand western India, and the Swan River IntegratedWatershed Management Project, which will support inte-grated watershed management in the Swan River at thefoot of the Himalayan Mountains.

In the Hussain Sagar Lake and Catchment AreaImprovement Project (see p. 40), the Kolkata Solid WasteManagement Improvement Project (see p. 28) and theOrissa Forestry Sector Development Project, which willhelp the local communities improve their living standardsthrough forest regeneration, JBIC will collaborate withJapanese local governments and universities to provideassistance that draws on Japanese knowhow.


The Pakistani government has drafted a 10-year plan andPoverty Reduction Strategy Paper (PRSP) to achieve the UNMillennium Development Goals and is focusing its effortson economic growth and poverty reduction. After Pakistanconducted a nuclear test in 1998, new ODA loans were sus-pended. However, during Prime Minister Koizumi’s officialvisit to Pakistan in April 2005, he expressed an intention toprovide ODA loans to Pakistan. Following up this commit-ment, JBIC provided ODA loans to two infrastructuredevelopment projects.

The Lower Chenab Canal System Rehabilitation Projectaims to increase agricultural production by rehabilitatingirrigation systems, thereby contributing to poverty reduc-tion and regional economic development. In the Load

South Asia

A Japanese expert on disaster prevention forests on coastal areas conducted afield survey and gave advice (the Orissa Forestry Sector Development Project).

Support for electrification in rural areas by rehabilitation of the old substation

India is home to one third of the world’s population livingin poverty. In the 10th Five-Year Plan (April 2002–March2007), the Indian government designated poverty reduc-tion through economic growth and environmental conser-vation as priority development issue. Following this policy,JBIC placed the priority of its assistance on economic infra-structure development, regional development benefitingthe poor and efforts to address environmental problems.

In FY2005, ODA loans were provided for the Delhi MassRapid Transport System Project (Phase 2) (I) and theBangalore Metro Rail Project (see p. 26) to reduce trafficcongestion and alleviate air pollution in the two cities. AnODA loan for the Visakhapatnam Port Expansion Project(E/S) will support the expansion of port facilities that han-dle the largest annual cargo volume in the country. In thewater supply and sanitation sector, the Bangalore WaterSupply and Sewerage Project (II-2) will lead to the expan-sion of water supply and sewerage facilities in theBangalore metropolitan area, including the slums, andimprovement in the business management of water utili-ties, thereby helping boost industrial activity and reducepoverty. JBIC will also support the Purulia Pumped StorageProject (III) where the country’s largest pumped storagepower plant will be built to relieve power shortages in theeastern state of West Bengal.

JBIC will help raise the standard of living of local com-munity inhabitants, including those living in poverty,through the Rural Electrification Project, which will

Pakistan


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Dispatch System Upgrade Project, the National PowerControl Center, an entity responsible for controlling thecountry’s entire power supply (excluding Karachi), andrelated facilities will be modernized to ensure a stablepower supply, which will contribute to economic growth.

In the wake of the devastating earthquake in northeast-ern Pakistan on October 8, 2005, JBIC provided theEmergency Earthquake Recovery Loan (see p. 41). This loanwas extended after a very short processing period lastingonly about three months following the earthquake, basedon the findings of the preliminary damage and needsassessment carried out jointly with multilateral institutions.


In Sri Lanka, it remains an urgent issue to make progress inrehabilitation and reconstruction from the devastationcaused by the 20-year civil conflict and the damage of thetsunami triggered by the earthquake off the coast ofSumatra in December 2004.

Immediately after the tsunami, JBIC collaborated withthe World Bank, Asian Development Bank (ADB) and otheragencies and conducted a joint damage and needs assess-ment. Based on its findings, ODA loans were provided inJune 2005 for the Sri Lanka Tsunami Affected Area Recoveryand Takeoff (STAART) Project (see p. 21), which supportedemergency recovery from the tsunami damage, and theVavuniya-Kilinochchi Transmission Line Project (see p. 29),which will support the rehabilitation of transmission linesin the civil war-ravaged northern region.

Furthermore, to support medium- and long-term recon-struction from the civil conflict and the tsunami, whilepromoting development, JBIC provided ODA loans forthree infrastructure projects. The Pro-Poor Eastern

Infrastructure Development Project supports reconstructionand development by developing large-scale infrastructure,including roads and a bridge in the Eastern Province thatbore the brunt of the civil conflict and the tsunami. TheGalle Port Development Project (I) aims to bolster econom-ic development in the southern region that sustainedextensive damage from the tsunami by developing a portthat serves as a hub in the region’s economic activity.Although the tsunami has brought a decline in the numberof foreign visitors to Sri Lanka, the tourism sector hasplayed a significant role in boosting the national economy,earning foreign currencies and generating employment.Thus the Tourism Resources Improvement Project (TRIP)(see p. 42) will support private sector-driven economicgrowth by developing tourism-related infrastructure andhuman resources in the tourism industry, primarily in cen-tral Sri Lankan cities where world heritage sites are located.


Azerbaijan, which gained independence from the formerSoviet Union in 1991, has achieved almost 10% annualgrowth in recent years, driven by oil and natural gas devel-opment. In contrast, a number of domestic power stationswere built during the Soviet era, and their antiquated facili-ties have led to a significant fall in the capacity of powersupply. In particular, the gap between power demand andsupply is growing in the eastern region where the capitalBaku is located and the population is concentrated andindustry is heated.

To address this situation, JBIC provided an ODA loan forthe Shimal Gas Combined-Cycle Power Plant ConstructionProject (Second Unit) (see p. 27), which aims to expand theShimal thermal power station located near Baku. As theproject is expected to increase the country’s power supplycapacity, it will help alleviate power shortages and lay thegroundwork for economic development.


Sri Lanka

AzerbaijanStudents stand helpless at their collapsed school after the earthquake inOctober 2005.

Central Asia andThe Caucasus

Egypt has recorded economic growth in the 4–7% rangesince the 1990s. This sustained growth has rapidlyincreased power demand, causing continuous tight supplyof electricity during peak hours. To meet this sharply risingpower demand and, at the same time, to advance environ-mental conservation, the Egyptian government has drawnup a policy to generate 880 MW, which account for about3% of the total domestic capacity, by new and renewableenergy sources.

Following this policy, JBIC provided an ODA loan for theKuraymat Integrated Solar Combined Cycle Power PlantProject (see p. 30). Under this project, an integrated solarcombined cycle power plant, the first such plant to befinanced by an ODA loan, will be constructed to increasethe power supply. The project also aims to alleviate air pol-lution and reduce greenhouse gas emissions in partnershipwith the Global Environment Facility (GEF), which hasknowhow on environmental projects.1


Algeria is a country in northern Africa with a land area of2.38 million km2 (about six times the size of Japan). Since80% of its land is desert, the population is concentrated in7% of the territory.

In May, 2003, an earthquake measuring 6.7 on theRichter scale hit northern Algeria, leaving 2,274 dead and11,452 injured, and many public buildings collapsed.Especially in the hardest hit provinces of Boumerdes andAlger, many school facilities sustained heavy damage. As aresult, students have to attend classes in substandard con-ditions: in makeshift schools or by using the damagedschool buildings after emergency repairs have been made.

Accordingly, JBIC provided an ODA loan for theEarthquake-Affected Education Sector ReconstructionProject to support the reconstruction of 26 primaryschools, 4 junior high schools and 6 senior high schoolsthat suffered the heaviest damage. The project is expectedto improve the educational environment by constructingearthquake-resistant school buildings.



A damaged school building will be repaired by theODA loan.

School building damagedby the earthquake

Algeria

Africa

Students learn in the classroom.

Egypt

1 GEF was established in 1991 through the combined efforts of the World Bank, UNEP, and UNDP to support the environmental conservation efforts of developing countries. It is an internationalfinancial mechanism that provides multilateral funds in grants for projects that address global environmental problems in developing countries and economies in transition.

Morocco has designated improving the investment climate,water resource development and management, and redress-ing regional disparities as its development agenda. Underthe initiative of King Mohamed VI, the Moroccan govern-ment has launched the Economic and Social DevelopmentPlan (2000–04) and other programs to achieve sustainablegrowth and reduce regional disparities.

Against this background, JBIC provided an ODA loan forthe Sewerage System Development Project to support thecountermeasures against environmental degradation inurban areas as part of efforts to develop and manage waterresources. The project aims to improve the living environ-ment of community residents who have to rely on rivers astheir source of domestic water by constructing and rehabili-tating sewage treatment facilities in small and mediumcities where existing sewerage systems are not functioningadequately.

The Rural Electrification Project (III) aims to raise therural electrification rate by increasing access to electricity inrural villages where poverty incidence is high, therebyredressing regional disparities.

In addition, JBIC provided an ODA loan for theMarrakech–Agadir Motorway Construction Project, underwhich a highway will be constructed to link Marrakech, acity at the center of the country’s economic activity andtourism, and Agadir in southwestern Morocco. The projectis expected to boost domestic road transport, and promotetrade with African countries and tourism, thereby helpinginvigorate the country’s economic activity.


Since the 1990s, Tunisia has been breaking out of the tradi-tional economic structure that relies primarily on agricul-ture and oil export. The 10th Five-Year Social and EconomicDevelopment Plan (2002–2006) prepared by the Tunisiangovernment gave the highest priority to strengtheningindustrial competitiveness, human resource developmentand employment creation, with its sights set on establish-ing a free trade zone with the European Union (EU) in2008. It also placed importance on increasing rural electri-fication through taking advantage of renewable energy.The Plan thereby aims to achieve a stable society throughrural development and sustainable economic growth.

In line with this policy, JBIC provided an ODA loan forthe Borj Cedria Science and Technology Park1 DevelopmentProject (see p. 36) to support human resource developmentto increase industrial competitiveness. In partnership withJapanese universities and research institutions, as well aswith JICA, the project will support the human resourcedevelopment in science and technology and the enhance-ment of research and development capacity.

JBIC also provided an ODA loan for the PhotovoltaicRural Electrification and Water Supply Project (see p. 31),which aims to increase rural electrification by utilizingrenewable energy. Specifically, photovoltaic power genera-tion systems drawing on advanced Japanese tech-nology will be installed to exploit the country’s characteristiclong hours of sunshine in rural villages far from power dis-tribution and transmission lines and in the southern regionthat relies on diesel power generation for pumping under-ground water. The project is expected to advance rural elec-trification through making use of renewable energy, therebycontributing to regional economic development and higherliving standards for the local communities.



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Tunisia

A 4-lane highway is being developed to replace the existing road for moreeffective transport.

Morocco

Installation of the photovoltaic power generation system draws on advancedJapanese technology.

1 A technopark is an industrial park centered on higher educational institutions and/or research institutes and serving as a cluster of science and industrial technology.

Costa Rica is one of the smaller countries in CentralAmerica with a land area of 50 thousand km2 and a popula-tion of 4.3 million (as of 2004). Apart from agriculture,which is the traditional industry, Costa Rica has successfullydeveloped the tourism industry, especially ecotourism,based on its rich diversity of natural resources. In addition,the country has successfully courted foreign direct invest-ment, elevating services and manufacturing to importantindustries in the country. Despite these advances, sewagetreatment systems are underdeveloped in Costa Rica whereonly 4% of wastewater is treated. This is far lower thancomparable figures in other Central American countries.Particularly in the San Jose metropolitan area where some30% of the country’s total population lives, sewage is dis-charged into rivers untreated, thereby causing seriousenvironmental pollution and health hazards.

To improve this situation, JBIC provided an ODA loan forthe Metropolitan San Jose Environment ImprovementProject, which aims to develop sewerage facilities in theSan Jose metropolitan area. This project will allow sewagetreatment for 65% of the local population. Thus, it isexpected to improve the living and public health environ-ment, including a better quality of water in the rivers run-ning through urban districts and reduced incidences ofcholera and other waterborne diseases. Environmentalimprovement in the San Jose metropolitan area is alsoexpected to contribute to ecotourism and the tourismindustry that is being promoted by the country.


Senegal, which is on the western tip of West Africa, has aland area of 200 thousand km2 (about half the size ofJapan) and a population of 10 million. Its major industry isagriculture, which employs about half of the country’sworking population. However, roads linking farmlands andthe market are underdeveloped, and there are regionswhere it is difficult to have access to basic social services.Thus raising living standards of local communities andboosting regional economic activity remain challenges tobe addressed.

The West African region including Senegal and Mali hasbeen pursuing regional integration by forming the UnionEconomique et Monetaire Ouest Africane (UEMOA) and theEconomic Community of West African States (ECOWAS).There is thus a growing need for cross-border infrastructuredevelopment.

Against this background, JBIC provided an ODA loan forthe Road Improvement and Transport Facilitation Programon the Southbound Bamako-Dakar Corridor under EPSA forAfrica (see p. 22). The project aims to construct an interna-tional arterial road that links Dakar, the capital of Senegal,to Bamako, the capital of neighboring Mali. The projectwill also involves development of farm road connections tothe arterial road, thereby invigorating economic activityand raising living standards of the people living in the tar-geted areas where many people are living in poverty.

This is the first project JBIC cofinanced with AfDB underthe scheme to promote cofinancing with AfDB based onthe “Enhanced Private Sector Assistance (EPSA) for Africa”1

launched by the Japanese government.

aODA loan commitments during FY2005:¥960 million for 1 project


Costa Rica

Latin Americaand the Caribbean

Dakar, the center of commerce and trade in West Africa

Senegal

1 The Japanese government announced the EPSA (Enhanced Private Sector Assistance) for Africa in June 2005, as a joint initiative with AfDB.

Sewage treatment systems are underdeveloped in the San Jose metropolitan area.

Guatemala has the largest population and the highest GDPin Central America (as of 2004). Although the Guatemalangovernment and the rebels established peace by signing thePeace Accord in December 1996, 36 years of internal con-flict1 have left an indelible mark on the country: the pro-portion of paved roads remains 17%, despite the fact thatroads are the major transport mode.

JBIC thus provided an ODA loan for the ZONAPAZ RoadImprovement Project (see p. 32) to support the rehabilita-tion of a national highway RN-7 East that crosses theregion most devastated in the civil war and access roads toneighboring communities. The project will give a boost tothe regional economy, thereby serving to reduce povertyand consolidate peace.

In addition, under the Plan Puebla2 Panama, an initiativeto promote development in the Central American regionranging from the Mexican state of South Puebla toPanama, the national highway RN-7 is designated one ofthe priority roads in need of improvement. When rehabili-tation work on the highway is completed with ODA loanassistance, it is expected to serve as a regional infrastructurestraddling the neighboring countries, providing a comple-mentary cargo transport route that runs across Guatemalaand leads to neighboring Honduras and Belize.


Paraguay is a landlocked country sharing borders with Brazil,Argentina and Bolivia. The country is currently purchasingmore than 80% of its power needs from the ItaipuHydropower Station (12,600 MW), which was developedjointly with Brazil. However, reliance on the purchase of elec-tricity even to meet peak demand has increased costs. Inaddition, the U.S. dollar-denominated contract runs the riskof a further increase in purchase cost when the exchange ratefluctuates. These considerations have led the Paraguayan gov-ernment to curb the cost of purchasing electricity and stabi-lize power supply by constructing a domestic power station.

Against this background, JBIC provided an ODA loan forthe Yguazu Hydropower Station Construction Project. Thescope of the project is to construct a hydraulic power sta-tion (200 MW) that makes use of the existing YguazuReservoir and construction of a sub-station and distributionfacilities that link the power station to the power grid sys-tem. Stabilizing domestic power supply will enable powerinterchange with the neighboring countries and lead to astable power supply system in the entire region in thefuture. It was from this perspective that this project is pro-moted under the Initiative for the Integration of RegionalInfrastructure in South America.3

Since the project uses water, a clean energy source, andhelps reduce greenhouse gas emissions, it is expected that theClean Development Mechanism (CDM), one of the KyotoMechanisms, will be applied to the project. JBIC signed acooperation agreement with the Secretary of Environment(SEAM) of Paraguay to promote the implementation of CDMprojects in the country. Under this agreement, JBIC will con-duct a study on possible application of CDM for this projectas part of its effort to acquire GHG emission reduction creditsunder the provision of ODA loans.



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1 The civil war was triggered by a revolt of a group of junior military officers in 1960 who were dissatisfied with the Ydigoras Fuentes government’s pro-U.S. policy. It was the longest internal conflict in Central America and came to an end in December 1996 with the signing of the Peace Accord.

2 Under the joint initiative by System for Integration of Central America (SICA) member countries (Costa Rica, El Salvador, Guatemala, Nicaragua, Honduras, Panama, and Belize) and Mexico, theplan was adopted at the Mexico-Central America Summit held in June 2001 to promote development in the Central American region. Specifically, the Plan envisions development in eight areas,including the interconnection of electric power transmission systems and the integration of road networks. (In July 2006, Colombia was approved to join the Plan Puebla Panama at the Panama-Central America Summit.)

3 Iniciativa para la Integración de la Infraestructura Regional Suramericana (IIRSA) is a plan, drawn up by 12 South American countries, to promote regional integration through strategic and system-atic infrastructure development. JBIC support to this project is its first effort to help advance this initiative.

A hydropower plant willbe constructed by utiliz-ing the existing YguazReservoir.

Road improvement inpost-conflict areas willhelp improve l ivingstandards in local com-munities.

3—oda loan operations in individual countries - jica · 8 – – oda loan operations in...

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