Nippon Export and Investment Insurance (NEXI), a 100% government-owned insurance provider, has announced that it will provide export credit insurance to a Japanese consortium including Sumitomo that signed a 500 billion yen contract to build a large-scale coal-fired thermal power plant in the People’s Republic of Bangladesh. NEXI will cover the project for up to 400 billion yen, the largest amount it has underwritten on a single project.

The power plant is designed to provide about 10% of the total generation capacity of Bangladesh, and the credit insurance will reduce the investment risk for the Japanese consortium. Power shortages have been a challenge for the South Asian nation’s economic development. The credit was extended as it was determined that the demand for electric power facilities is on the rise and this project could increase the export opportunities of the Japanese government’s Quality Infrastructure Partnership Initiative.

The plant will be constructed on Matarbari Island in southeastern Bangladesh and will have a generation capacity of 1,200 megawatts. The project is scheduled for completion in 2024. Although it will rely on imported coal as fuel, the high efficiency coal-fired power technology developed in Japan will curb fuel consumption and CO2 emissions, thereby reducing the environmental impact compared to conventional thermal power generation that uses regular coal.