Financing secured for new Egyptian refinery
8/9/2010 12:00:00 AM
“We are delighted to announce the debt package for what we believe stands as one of the largest project finance deals ever assembled in Africa,” said Citadel Capital Managing Director Marwan Elaraby. “ERC has won outstanding backing from leading global institutions because it will have a notable effect on both Egypt’s economy and on the environment, particularly in the greater Cairo area. It has similarly enjoyed the full backing and support of the government of Egypt and, in particular, of the ministry of petroleum.”
The debt package includes $2.35 billion of senior debt and $225 million of subordinated debt. Institutions participating in the senior debt package include the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI), the Export-Import Bank of Korea (KEXIM), the European Investment Bank (EIB) and the African Development Bank (AfDB). First drawdown under the senior debt facilities is expected in the coming two months.
Mitsui & Co., which is part of the consortium of contractors building the refinery, is providing $200 million of subordinated debt financing. The African Development Bank is providing an additional $25 million of subordinated debt financing.
News of the debt package came just weeks after the International Finance Corporation (IFC) announced it would invest equity of $100 million in the project. The refinery, to be located in the greater Cairo district of Mostorod, will sell its production to the state-owned Egyptian General Petroleum Corp. (EGPC) under a 25-year offtake agreement at international prices.
ERC is a partnership between Citadel Capital, its co-investors and EGPC. EGPC owns 15% of the project; its Cairo Oil Refinery Co. (CORC), the nation’s largest refinery with 20% of Egypt’s current refining capacity, will provide ERC with fuel oil as feedstock.
“Considering the operational, financial and regulatory complexity of building a refinery today, the signing of ERC’s debt package has come together remarkably quickly,” said Tom Thomason, Chief Executive Officer of ERC. “ERC will improve the environment of greater Cairo by preventing on an annual basis approximately 93,000 tons of sulfur from being released into the atmosphere. It will also invest in improvements to CORC’s environmental performance, particularly the emission of greenhouse gases.”
ERC has obtained all regulatory and environmental approvals and signed a lump-sum turnkey contract with GS Engineering & Construction/Mitsui & Co. The project’s builders expect to complete construction and operational testing of ERC in the second half of 2014 in time for operations to begin in 2015.
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