Datang Sino-Japan (Chifeng) Renewable Power Company – a joint venture between China's state-owned Datang Corporation and Japan's Sumitomo Corporation and Kyushu Electric Power – secured locally denominated project debt for a 50MW wind project in China's Inner Mongolia Autonomous Region in mid-2009.

The deal was novel in being structured as a purely local currency financing under parallel facilities provided by the Asian Development Bank and ICBC, and supported by limited shareholder guarantees.

The debt comprises a RMB164 million ($24 million) facility from ADB and a RMB170 million ($24.9 million) loan from ICBC.

The proposed wind farm is expected to provide electricity to the national grid, while reducing carbon dioxide emissions by a projected 140,000 tons per year, at a total project cost of $73 million.

The project involves construction and operation of the wind farm on a build-operate-own basis for a period of 25 years. The turbines have a nameplate capacity of 49.5MW. The project also includes the addition of a 63MVA power transformer at Dong Shan Electric Booster Station. Power from each wind turbine generator will be transmitted via three transmission lines wiring all units to the nearest transmission lines of Dong Shan Electric booster stations which will be further connected to the Northeast China Grid Company (NCGC). In addition the project requires a 14km access road.

The project sets down a template to replicate for future private investment in the Chinese wind sector – in effect collaboration between foreign sponsors and one of the state-owned established local power companies. And it is much needed: China generated 12GW from wind power in 2008, and the government intends to boost that to 100GW a year by 2020. Mongolia has wind energy resources that can be exploited by existing technologies of an estimated 150GW.

Datang Sino-Japan (Chifeng) Renewable Power Co
Status: Financial close 7 July 2009
Description: Financing for a 50MW wind project in China's Inner Mongolia
Sponsors: China Datang Group, Kyushu Electric Power, Sumitomo Corporation
Lead arrangers: Asian Development Bank, Industrial & Commercial Bank of China
Financial adviser: Mizuho
Sponsors' legal counsel: Norton Rose (ADB's counsel); Runming Law Firm (Japanese Sponsor's PRC counsel); Simmons & Simmons (Datang's counsel); Atsumi & Partners (Japanese counsel to Kyushu Electric); and Momo-o, Matsuo & Namba (Japanese counsel to Sumitomo Corporation).
Lenders' legal adviser: Norton Rose (ADB); Capital Associates (PRC counsel to ADB)