This summary covers loans from financial institutions to be determined in the UNIT Zakho Power Plant in Iraq. The financing is to be covered by a MIGA guarantee for up to $400 million for a period of up to 13 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
The project involves the development, design, financing, construction, testing, commissioning, ownership, and operation of a greenfield natural gas-fired power plant, with an initial capacity of 840 megawatts, on a build, own, and operate basis, located near Zakho in the Dohuk Governorate of Kurdistan Region of Iraq (KRI).
The project is a Category A under MIGA’s Policy on Environmental and Social Sustainability. An environmental and social review summary (ESRS) for the project was prepared by the International Finance Corporation (IFC), and disclosed on March 24, 2014. Following discussions with the client, the Environmental and Social Action Plan (ESAP), which was disclosed with the ESRS, was updated on January 23, 2015. Discussions with the client in January and February 2015 have confirmed that the findings of the 2014 ESRS are still valid as construction has not yet started, environmental and social conditions at the site remain largely the same and the design of the project has not materially changed. Click here to view the ESRS and ESAP prepared by IFC.
Lack of reliable power is a key factor constraining economic growth in the region. The project will help address a significant demand-supply gap in Iraq, which suffers from frequent blackouts. In the long term, the project will help KRI become a net electricity exporter, providing revenue for KRI and helping meet demand beyond the region. The project would also provide a demonstration effect as it would be the first long-term, limited-recourse project financing in modern Iraqi history.
MIGA’s involvement is essential to mobilizing commercial bank financing for the transaction.