Mizuho Bank clinches 1st project finance deal in Cambodia with ING for power transmission
BANGKOK, NNA – Major Japanese lender Mizuho Bank has teamed up with ING Bank NV of the Netherlands in extending a $55 million loan for a power transmission project in Cambodia to meet rising electricity demand in the fast-growing economy in Southeast Asia.
The syndicated loan is the first project finance in the kingdom, the Tokyo-based megabank said Wednesday. Project finance is long-term financing in which the amount of loans is calculated based on the estimated cash flows of the project concerned.
The two banks signed a contract on March 12 on the 10-year loan with Cambodian Transmission Ltd. (CTL), which operates a power transmission network in Cambodia, Mizuho Bank said in a statement.
“Cambodia’s economic development has led to a rise in demand for stable power supply, and the energy sector is now a key area in economic policy,” the Japanese lender said.
The loan will cover a project for power transmission between the northern part of Phnom Penh and Kampong Cham Province, north of the capital. The total extension of the 230-kilovolt power cables between these two areas will be about 100 kilometers.
In the finance scheme, Mizuho and ING will provide funds for the project as the lead arrangers, while the Cambodian government and the Multilateral Investment Guarantee Agency (MIGA), an affiliate of the World Bank, will guarantee the loan.
Under the contract, Mizuho Bank will perform fund settlement and negotiation support work for CTL outside Cambodia, while Maybank (Cambodia) Plc, with which Mizuho has formed a business tie-up, will do similar work in Cambodia.
Cambodian Transmission launched a project to transmit power to the Phnom Penh metropolitan area under a 25-year contract it signed with Electricite Du Cambodge, the state-run electric power company, in August 2013.
Malaysian HNG Capital Sdn. Bhd., which extends loans for power generation and other business, holds a stake in CTL.