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Egypt Secures $3.7 Bln for Egyptian Refinery Company

Source: Reuters 6/7/2012, Location: Egypt

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Egypt has secured $3.7 billion in project financing to upgrade a facility to be operated by the Egyptian Refinery Company (ERC) in one of the country's largest ever inward investments. Prime Minister Dr Kamal Al-Ganzouri and project company representatives signed an agreement in Cairo earlier on Thursday with the deal expected to be closed within days.

The scheme was developed by local private equity house Citadel Capital and is a key project for Egypt as it will reduce the country's import bill by producing valuable light fuel products. The new unit will take light products and fuel oil from EGPC's Cairo Oil Refinery Company (CORC) and turn them into valuable light products such as diesel, fuel oil, jet fuel and naphtha. These products will then be sold back to EGPC under a take-or-pay contract with the product prices based on international norms.

Qatar Petroleum International (QPI) is joining the sponsor group on the project by taking a 25.3% stake in the scheme. The QPI investment is significant, and not just for the project. Qatar Inc has been playing a larger political role in North African affairs in the past year, including in Libya. It is now backing this new role up with investment. Qatar National Bank (QNB) has joined the banking syndicate backing the deal.

Other shareholders in the scheme include state oil company Egyptian General Petroleum Corporation (EGPC), which will hold 24.2%, Citadel Capital, Saudi Arabia's Al Rajhi, the World Bank's IFC, Germany's DEG and Holland's FMO. The financing is international and includes a $2.35 billion project finance package put in place back in August 2010 and a $1.9 billion construction contract with South Korean construction company GS and Japan's Mitsui. The rest of the funds will come from the shareholders.

The project financing is being supplied by agent bank BTMU, local bank CIB, Credit Agricole, HSBC, financial adviser on the deal Societe Generale, Alhi United, KfW, KBC, Sumitomo Trust and Standard Chartered. QNB and Apicorp recently joined the deal, replacing Espirito Santo and WestLB. Multilateral loan support is being provided by South Korea's Kexim, Japan's Nexi and the European Investment Bank (EIB).

The financing was due to be signed at the end of January 2011 but had to be postponed because of the revolution that rocked Egypt last year. The financing package and the construction contract have remained largely the same, however, despite the big changes in Egypt and the global capital markets since then.

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