The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Kim Yong-hwan, “Korea Eximbank”) announced on December 19 that it will provide a PF loan of USD 1.23 billion (KRW 1.3 trillion) to the Jeddah South Thermal Power Plant project in Saudi Arabia, awarded exclusively to Hyundai Heavy Industries by SEC (Saudi Electricity Company)*.

Korea Eximbank Chairman Kim Yong-hwan met with SEC Chairman Ali Bin Saleh Al-Barrak at Shilla Hotel, Seoul, on the morning of December 19 and signed the agreement.

* The Saudi Electricity Company (SEC) was established in December 1999 by a royal decree stipulating the merger of all Saudi electricity companies in the Kingdom of Saudi Arabia. It is 81% state-owned and is the largest power producing company in the Middle East, with an 80% share of electricity generation and a monopoly over electricity transmission and distribution across the Kingdom.

Hyundai Heavy Industries will carry out the construction of the USD 3.2 billion Jeddah South Thermal Power Plant project on a turnkey basis, including its design, engineering, procurement, construction, and testing.

The thermal power plant will have a generation capacity of 2,640 MW, which accounts for 5% of Saudi Arabia's entire power generation capacity, and will be built on the Red Sea coast, 70km south of Jeddah, the largest port city in the Kingdom.

Korea Eximbank contributed greatly to the awarding of the contract to Hyundai Heavy Industries by issuing a Letter of Intent (L/I) to finance the project in 2012 August, early in its bidding stage, in an effort to support the entry of Korean companies in the Middle Eastern power generation market.

This is the second time Korea Eximbank is providing a large-scale financing to SEC.

In 2012, Korea Eximbank provided USD 945 million for the Saudi Rabigh 6 Thermal Power Plant Construction Project awarded by SEC to Doosan Heavy Industries.

That SEC picked Korea Eximbank over other ECAs around the world as its financier for the second time in a row reflects the Bank's steady efforts to build its Middle East network including through its Middle East marketing tour.

This project financing secured for Korea Eximbank both a high-quality borrower as its client and a stable long-term asset with a fifteen-year maturity.

SEC plans to invest USD 12 billion every year in the power generation sector until 2017, or USD 61.3 billion in total, with the aim of boosting Saudi’s power reserve margin from 7% to 10%.

With a flurry of more power plant projects expected to come in the Middle East, Korea Eximbank plans to make greater use of its Middle East network and provide extensive financing to help Korean companies seize project opportunities in the region.

A Korea Eximbank official remarked, "The fact that SEC entrusted Korea Eximbank with such a large-scale financing is evidence of the Bank's growing reputation in the international financing market," adding that "Korea Eximbank will continue to act as a strong promoter of Korean companies participating in large-scale projects."

Other financiers taking part in the project include one more Korean ECA (K-Sure, USD 404 million) and two Japanese ECAs (JBIC, USD 183 million; NEXI, USD 183 million).