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Buyer’s Credit for ERC Refinery Project in Egypt
Supporting Japanese Firm’s Large-Scale Export to Africa

  • Region: Africa
  • Machinery and Equipment
  • Export Loans
  • Project Finance
NR/2010-25
August 10, 2010
  1. The Japan Bank for International Cooperation (JBIC, President & CEO: Hiroshi Watanabe)*1 signed on August 9 a buyer's credit*2 agreement in the amount of up to 900 million US dollars with the EGYPTIAN REFINING COMPANY (TAKRIR) S.A.E. (ERC), a company incorporated in the Arab Republic of Egypt, provided under project financing*3. This loan was cofinanced with the following commercial banks: The Bank of Tokyo-Mitsubishi UFJ (the Facility Agent); Société Générale Tokyo Branch; The Hongkong and Shanghai Banking Corporation Limited, Tokyo Branch; Standard Chartered Bank Tokyo Branch, ; Crédit Agricole Corporate & Investment Bank, Tokyo Branch and The Sumitomo Trust and Banking Co., Ltd., with the Nippon Export and Investment Insurance (NEXI) providing Buyer's Credit Insurance for the cofinanced portion. Besides this loan, the project has also been financed by other export credit agencies and multilateral institutions, namely the Export-Import Bank of Korea, the European Investment Bank and the African Development  Bank. This is the first project finance loan that JBIC has provided to a project in the Arab Republic of Egypt.
     
  2. In this Project, ERC, in which Citadel Capital S.A.E., an Egyptian investment company, and the Egyptian General Petroleum Corporation (EGPC) have equity stakes, will construct, own and operate processing units to refine atmospheric residue to be fed from EGPC's existing Cairo Refinery, and will then sell diesel and other refined products to EGPC over the long-term. JBIC is financing ERC to construct the new processing units, the EPC contractor for which is a joint venture which includes Mitsui & Co., Ltd., thereby supporting the export of Japanese plant facilities and machinery.  
     
  3. With many of its existing refineries equipped with simple and outdated distillation units, Egypt, an exporter of surplus fuel oil, is unable to meet domestic demand for middle distillates such as diesel and relies on imports for such products. The Project is aimed at substituting such imports with domestic production by installing advanced processing facilities. Additionally, the Project is expected to contribute to environmental improvement, as the production of high-quality refined products with the state-of-the-art facilities to be installed will reduce emissions of such air pollutants as NOx and SOx.
     
  4. During the fourth meeting of Tokyo International Conference on African Development (TICAD IV) in May 2008, the government of Japan pledged to offer some 2.5 billion US dollars in financial support to Africa over a 5-year period through JBIC operations.  This loan, which supports Japanese firms' exports to Africa, is well aligned with this government policy.  
     
  5. When the Project was forced to reconsider its financing plan due to the credit squeeze in the aftermath of the financial crisis in 2008, JBIC decided to participate in this Project and helped structure effective financing in collaboration with other public financial institutions, while drawing on its abundant experience in project finance.  To create export opportunities for Japanese industries, JBIC will continue its support for Japanese overseas business activities by drawing on its expertise, risk-assuming function and wide range of financial instruments. 
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 A buyer's credit is a direct loan from JBIC to a foreign importer (buyer) to finance its import of machinery and equipment from a Japanese exporter.
  3. *3 Project finance is a loan scheme in which repayment is made from the project's cash flow and security for the loan is provided by the project’s assets.
  4.  

 

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