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Terms and Conditions of Japanese ODA Loans

Sectors and Fields of Preferential Terms (Effective from October 1, 2007)[1]

I.Global Environmental Problems, Industrial Pollution

1.Forest conservation, forestation

  • (1) Forest conservation and management
  • (2) Afforestation and Reforestation
  • (3) Research for forest resources
  • (4) Others(Monitoring system etc.)

2.Prevention of Pollution

  • (1) Prevention of air pollution

    Example:Installation of equipment for the prevention of air pollution
    Rehabilitation of existing power plants contributing to reducing air pollution
    Upgrading and rehabilitation of factories etc.
    Selecting coal quality for the prevention of air pollution

  • (2) Prevention of Water Pollution

    Example:Effluent treatment, recycling of water
    Sludge treatment, residue treatment
    Relocation of factories for water pollution prevention
    Treatment facilities for preventing water pollution in harbors etc.
    Sewage treatment facilities

  • (3) Waste Treatment

    Example:Collection, processing, disposal of solid waste

3.Energy Saving and Resource Conservation

Example:Installation of energy saving facilities and equipment
Power plants and transmission and distribution lines for energy saving and resource conservation
Centralized city heating system

4.Conservation of natural environment

  • (1) Protection of wildlife
  • (2) Research for marine resources
  • (3) Research for genetic resources
  • (4) Conservation of soil
  • (5) Others(research, monitoring)

5.New and renewable energy sources [2]

Example:Photovoltaic power generation, Utilization of solar thermal energy
Wind power generation
Utilization of heat and power generation through waste treatment
Geothermal power generation
Biomass energy
Utilization of urban waste heat
Fuel Cell
Utilization of exhaust gas

6.Protection of ozone layer

Example:Emission contorol or collection of CFC etc.
Treatment of materials damaging ozone layer

7.Marine Pollution

Example:Machines or vessels for the prevention of marine pollution
Measures for preventing marine disposal of wastes, Monitoring

8.Protection of desertification

Example:Afforestation, protection of forest
Agriculture protecting desertification

9.Water supply contributing to the prevention of infectious disease and poverty reduction

II. Human resource development

  • (1) Foreign study or training to Japan
  • (2) Expert dispatch from Japan
  • (3) Lending to private foreign students in Japan

III. Small and medium sized enterprises

Low-interest loan facilities for specially samll businesses among small and medium sized enterprizes

IV. Peace building

Projects and programs for humanitarian improvement, restoration and reconstruction in peace-bulding countries and their surrounding countries.


  • [1] In case that a part of project is eligible for preferred condition, preferred condition can be applied to that part.
  • [2] Hydroelectric power generation with no significant impact on the environment can be categorized as a new and renewable energy only if it is confirmed that the project will have no problems as a result of deliberate investigation of environmental aspects.

In order to assist upper-middle income countries to reduce regional income disparities, projects to develop specified economic and social infrastructure in low-income regions will be provided by ODA Loans to such countries, where areas of ODA Loans have been hitherto limited in-principle environmental, human resource development, and anti-seismic measures projects.

Special Term for Economic Partnership(STEP)

The Government of Japan has decided to introduce a new ODA loan scheme from July 2002, now called the Special Term for Economic Partnership (STEP), which is expected to raise the visibility of Japan's ODA to the citizens in the recipient countries and Japan through utilizing and transferring excellent technologies and know-how of Japanese firms.

1. Recipient Countries of STEP

Low-Income Countries, Lower-Middle-Income Countries and Middle-Income Countries to which a tied aid can be extended under OECD rules (except Least among Less Developed Countries and Upper-Middle-Income Countries).

2. Eligible Projects of STEP

(1) Outline: Projects eligible for STEP will be limited to those which are in the sectors and fields below (2), and at the same time, for which Japanese technologies and equipment are substantially utilized.

(2) Sectors and Fields

*Bridges and Tunnels*Ports
*Airports*Urban mass transit system
*Oil/Gas transmission and storage facilities*Urban flood control projects
*Communications /Broadcasting/ Public information system
*Power stations/ power transmission and distribution lines
*Trunk roads/ Dams
(limited to projects that substantially utilize anti-earthquake techniques, ground treatment techniques, fast implementation techniques of Japan)
*Environmental Projects
(limited to projects that substantially utilize air-pollution prevention techniques, water-pollution prevention techniques, waste treatment and recycling techniques, and waste heat recycling and utilization techniques of Japan)

3. Terms and Conditions of STEP

(1) Interest Rate and Repayment Period
*Repayment period will be 40 years including 10 years grace period. Interest rate will be set so as to make it possible to extend a tied aid under OECD rules.

(2) Procurement Conditions:
*Prime contractors are tied to Japanese firms. Joint ventures (JV) with recipient countries are also admitted on condition that Japan is a leading partner.
Sub-contractors are untied and open to all countries.

(3)Country of Origin of Goods and Services to be Procured under STEP:
*Not less than 30% of the total amount of contract(s) (excluding consulting services) financed by STEP loan must be accounted for by either (a) goods from Japan and services provided by Japanese firms, or (b) goods from Japan only, according to the nature of project.

(a) In case of projects which advanced technologies and/or know-how of Japanese firms can be identified in Services (e.g. construction methods), not only Goods but also Services must be included in the ratio mentioned.Tunnels, ports, concrete bridges, trunk roads, dams, sewerage systems, urban underground headrace tunnels, public information systems, hydroelectric power, and geothermal power, etc.
(b) In case of projects which consist of mainly the installation of Goods or Plants and their core technologies can be identified in Goods or Plants, only Goods shall be included in the ratio mentioned.Communications/broadcasting facilities, wind/solar/thermal power generation, oil/gas transmission and storage facilities, waste treatment sites, waste incineration plants, steel bridges, urban mass transit systems, urban flood control projects, power transmission and distribution line, etc.

(4)Coverage Ratio:
*STEP covers up to 100% of the total project cost.

(5)In order to secure fair procurement process, procurements shall be audited by a third party after a bid process is completed, by utilizing ODA loan or JICA Special Assistance Facility.


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