| Egypt firm in $2.6bn deal to build refinery | Send to a friend |
| Tuesday, 10 August 2010 21:51 |
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The Egyptian Refining Company (ERC) has signed a debt package of $2.6 billion to finance construction of its state-of-the-art $3.7 billion second-stage oil refinery in the Greater Cairo Area. ERC is building a state-of-the-art $3.7 billion greenfield second-stage oil refinery in the Greater Cairo Area, which will produce over 4 million tonnes of refined products per annum, including over 2.3 million tonnes of EURO V diesel, the cleanest fuel of its type in the world. ERC’s production will be sold to the Egyptian General Petroleum Corporation (EGPC) under a 25-year off take agreement at international prices. The refinery will produce over four million tons of refined products per annum when completed, including 2.3 million tons of EURO V diesel, the cleanest fuel of its type in the world. ERC is a partnership between Citadel Capital (CCAP.CA on the Egyptian Stock Exchange, the leading private equity firm in the Middle East and Africa with $8.3 billion in investments under control), its co-investors and the state-owned Egyptian General Petroleum Corporation (EGPC). EGPC owns 15 per cent of the project; its Cairo Oil Refinery Company (CORC), the nation’s largest refinery with 20 per cent of Egypt’s current refining capacity, will provide ERC with fuel oil as feedstock. “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. He added that 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. That this project remained on track through the deepest financial crisis in living memory is a testament to ERC’s solid economic fundamentals. Iron-clad fundamentals and strong support from both legislators and regulators are exactly what financial institutions look for when considering which projects to back. 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 Corporation (EGPC) under a 25-year offtake agreement at international prices. “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 Mr Tom Thomason, ceo 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. Citadel Capital owns approximately 10 per cent of the Opportunity-Specific Fund (OSF) that controls ERC. Citadel Capital has management control of ERC through shareholder agreements with the limited partners who have been invited to invest in the OSF. Add this page to your favorite Social Bookmarking websites           |
