The Japan International Cooperation Agency (Jica) is moving ahead with financing around $2bn of projects in Iraq, despite the instability.

It is focusing on rehabilitating and installing basic infrastructure.

The largest project underway is the $1.5bn Basra refinery upgrade, which aims to reduce Iraq’s refined petroleum imports following the destruction of Baiji refinery. 

Iraq’s South Refineries Company (SRC) and Jica are finalising a second loan for the Basra refinery upgrade.

The loan agreement must be approved by both governments, before the project is tendered.

Three bidders for the engineering, procurement and construction (EPC) contract on the refinery project were prequalified in 2012. The bidders are Chiyoda, JGC and Toyo Engineering.

Jica has previously approved ¥44.5bn ($427m) of loans for the project.

Basra refinery is one of four upcoming projects in Iraq financed by Jica.

In 2014 Jica finalised a ¥39bn loan for an upgrade to Khor Al Zubayr Port by the General Company for Ports of Iraq. They are now preparing bid documents ahead of a tender.

This follows the Jica-funded upgrade of the nearby Umm Qasr Port between 2008 and 2013.

In central and southern Iraq, Jica is lending ¥53.7bn for phase two of an electricity reconstruction project, focusing on substations. The Ministry of Electricity is currently preparing to tender the project.

Jica is also considering redirecting funds from the ¥29.6bn Akkaz power plant, which was cancelled due to Islamic State in Iraq and Syria (ISIS) violence. This would allow phase three of the electricity transmission programme, involving mobile substations in Baghdad and Anbar, to go ahead.

In the Iraqi region of Kurdistan, Jica has committed ¥34bn to a sewage treatment plant and networks project. Detailed design began in mid-2015, and the Ministry of Municipalities and Tourism is preparing bid documents.

Participation in the projects will be mainly limited to Japanese contractors.

Jica has extended $6bn of loans to Iraq since 2003, supporting 23 projects. It is considering continuing this programme, but its commitments will depend on Iraqi, International Monetary Fund (IMF) and World Bank strategies.

Both development banks are providing budget support to Iraq. Baghdad is still struggling to meet the budget conditions for a $5.3bn IMF stand-by agreement. The World Bank committed $1.2bn, alongside $200m from Jica. A second tranche is now under consideration.