, Japan

$5b of Japanese megabank loans flow into Asian coal projects: report

Majority of the loans are financing coal projects in India, Indonesia and Vietnam.

Japan’s three largest private sector lenders, Mitsubishi UFJ Financial Group (MUFJ), Mizuho Financial Group and Sumitomo Mitsui Financial Group (SMBC), have about $5b of outstanding loans for coal power project finance in emerging markets, with the majority in three countries: India, Indonesia and Vietnam, according London-based think tank InfluenceMap.

InfluenceMap’s briefing noted that all loans are anchored with Japanese government loans via the Japan Bank for International Cooperation (JBIC) and guaranteed by Nippon Export and Investment Insurance (NEXI). “The banks’ full lending exposure to coal power is likely much higher through exposure to corporate loans, for which disclosure is poor,” it said.

Japanese investors including Mitsubishi Corporation, Marubeni Corporation and Mitsui Corporation also have equity stakes in 18 projects in emerging markets, with a major stake (30% equity or greater) in at least 10 of these projects. Disclosure of equity holdings is also limited.

InfluenceMap noted that this equity is likely at risk given the uncertain status of coal power in the Asian energy mix in the medium to long term due to competitive pressures from alternative energy sources and strengthened environmental regulations, all of which could render the plants economically unviable.

The briefing cited an analysis from think tank Carbon Tracker Initiative, which suggests that the potential value of stranded coal power assets as their economic viability is undercut by the plummeting cost of renewable energy represents a significant portion of the GDP of the recipient countries highlighted in this report - roughly 3% each in the case of India, Indonesia and Vietnam.

“As the physical impacts of climate change accelerate and public and political concern grows, there is a mounting possibility that future disruption in the recipient-country power markets may lead governments to alter the conditions of their Japanese government-backed loans,” InfluenceMap noted, adding that the guarantee of these loans by the Japanese government for losses related to climate change has yet to be tested. 

Join Asian Power community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Laos poised to be Southeast Asia’s key electricity supplier
This comes amidst the development the Laos-Thailand-Malaysia-Singapore Power Integration Project.
Power Utility
US sanctions hit Iran’s clean energy sector: report
These have made it challenging for Iran to secure debt and equity finance amongst others. 
Lending & Credit
APAC to generate lion’s share of world’s energy by 2030
The region is expected to account for 56% of the world’s energy in the  next decade.
Power Utility
Wind energy industry needs 570,000 technicians by 2026
This comes as the global onshore and offshore wind increase in size by 67%.
People

Exclusives

Why Philippines’ EDC will not fire up coal
The devastating effects of climate change led the company to develop REs only.
Environment
Indonesia’s Pertamina signs up for hydrogen development
Pertamina is set to produce green and blue hydrogen as part of its clean energy target in 2030.