A number of Japanese financial institutions have helped fund
Iraq’s ministry of electricity (MoE) to fund the
construction of 16 substations, ending a 31-year ban on lending
to the Middle Eastern country. But the uncertainty which
surrounds repayments has rendered such financing highly risky.
The Japan Bank for International Cooperation (JBIC), Bank of
Tokyo-Mitsubishi (BTMU) and Sumitomo Mitsui Banking (SMBC) are
co-financing the JPY53 billion ($480 million) project, which is
expected to help Iraq alleviate chronic power shortages.
Counsel with knowledge of the financing deal point to a
special account recently established by JBIC, which is exempted
from the constitutional requirement of ensuring certainty of
repayment from borrowers. "The oil price and the increasing
cost of war against Isil have caused a serious financial crisis
in Iraq," said Naoki Ishikawa, partner at Mori Hamada