Japan to provide reconstruction loans to Iraq

The government will provide about 182.7 billion yen in yen loans, part of the largest assistance package after that of the United States, to assist Iraq's reconstruction efforts, sources said.

The contracts will be concluded as early as Friday between the Japan Bank for International Cooperation, a government-affiliated bank that funnels Japan's yen loans, and the Iraqi government, the sources said.

The loans will fund mainly infrastructure projects, such as modifying thermal power stations and petroleum refineries, in hopes of improving the Iraqi people's lives amid growing security in the country, the sources said.

The loan package, Japan's first to Iraq since the war was declared ended, is part of the roughly $5 billion (537 billion yen) in financial assistance that Japan pledged to Iraq in 2003.

While the two governments exchanged notes on 10 projects in 2007, confusion in the war-stricken country has delayed approval from the Iraqi authorities.

The 182.7-billion-yen package will cover eight projects, the sources said.

They include the repair of the al-Musaib thermal power station in suburban Baghdad, Iraq's largest power-generation facility; the restoration of tanker mooring facilities off Basra, southern Iraq; and construction of roads and bridges in Samawah, where Japanese Self-Defense Forces troops used to be stationed to assist with reconstruction.

The projects were picked based on requests from the Iraqi government. In the selection process, the regional security situations and other factors were taken into consideration.

The projects will be contracted to companies in Iraq and its neighboring countries.

In Iraq, power outages have been a serious problem, even though the security situation has improved.

Power plants are aging, and electricity supply has been interrupted for 10 hours or more daily in most regions.

If the al-Musaib power station is refurbished, its power-generation capability will more than double from the current 400 megawatts to about 850 megawatts, the sources said.

It will raise Iraq's power-generation capabilities to about 5,000 megawatts, more than half of the 8,000 megawatts the country requires, the sources said.

The increased power supply is expected to improve citizens' lives by restoring electricity to such facilities as hospitals and sewage systems around Baghdad, the sources said.

The contracts for the two remaining projects, such as the restoration of power facilities in the northern Kurdish region, are expected to be concluded within a few months, the sources said.

The package will bring the total of Japan's financial assistance committed to Iraq this year to about 240 billion yen, the sources said.

At an international meeting in October 2003, countries announced that they would provide financial assistance totaling $33 billion to Iraq.

The United States led the list of donors, with $18.6 billion, followed by Japan's $5 billion.(IHT/Asahi: January 21,2008)