(BNAmericas, Santiago, 10 January 2024) IDB Invest will provide $103 million in financing to Terminal Cuenca del Plata S.A. (TCP), including the mobilization of resources for $46 million from Banco Bilbao Vizcaya Argentaria S.A. (BBVA) for the design, construction and operation of the expansion of the Port of Montevideo. Additionally, IDB Invest financing will be complemented by a financing facility given to commercial banks by Belgium’s export credit agency, Credendo, for a total amount of approximately $340 million.
Belgium
Italy pushes to weaken European fossil fuel financing pledge
(Reuters, Brussels, 2 November 2022) Italy is attempting to weaken a pledge 10 European governments intend to make to stop export credit support for fossil fuel projects. The pressure from Italy comes as delegates from nearly 200 countries prepare for a United Nations climate change summit next week in Egypt, where world leaders will attempt to agree tougher action to tackle global warming. A group of ministers planned to make a joint statement on November 3rd committing to end public trade and export finance support for overseas fossil fuel projects by the end of 2022. The countries, which together make up the “Export Finance for Future” group, are Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden and Britain. [Delays in the statement’s release point to controversial negotiations.] A draft of the governments’ statement, seen by Reuters, said they would agree to end new direct official trade and export finance support for “exploration, production, transportation, storage, refining, distribution of coal, crude oil, natural gas, and unabated power generation”. Three sources familiar with the discussions told Reuters Italy had asked to remove the list specifying which fossil fuel activities would lose such support. “Italy objects that there is no consistency between the objective of achieving strategic autonomy from Russia and the impossibility of financing the necessary infrastructure,” an official briefed on Rome’s position told Reuters. Italy’s export credit agency SACE declined to comment. As countries attempt to balance fighting climate change with their short-term response to the energy crisis, some – including Germany – have suggested new investments in gas fields are needed. Countries are still negotiating the draft statement, which could change before it is published. Italy was the biggest backer of fossil fuels within the group, committing 8.4 billion euros in the period – with downstream oil and gas projects and gas-fuelled power plants among the projects. Italy is also moving to keep a Lukoil-owned refinery in business despite new sanctions against Russia kicking in next month. On September 30 the European Commission approved, under EU State aid rules, a €2 billion Italian scheme for the reinsurance of natural gas and electricity trade credit risk in the context of Russia’s war against Ukraine. A hard right coalition that includes pro-Russian voices just took power in Italy after running a campaign focused on energy costs and inflation.
Belgian ECA restricts oil and gas finance but leaves gas loopholes
(Oil Change International, Washington, 15 July 2022) Today the Belgian export credit agency Credendo published a new policy to shift public finance out of fossil fuels and into clean energy. The policy is meant to implement a commitment that Belgium made alongside 33 other countries and 5 institutions at the United Nations climate conference in Glasgow last year. The group promised to end international public finance for fossil fuels by the end of 2022 and shift this money to clean energy. Though today’s new policy imposes additional restrictions on fossil fuel financing, it leaves loopholes for Credendo to continue financing new fossil fuel projects. According to the International Energy Agency, to maintain a 50% chance of limiting global heating to 1.5°C there can be no investments in new coal, oil or gas fields or Liquefied Natural Gas (LNG) infrastructure without stranded assets. Other research shows that on top of ending investments in new fossil fuel supply, 40% of already developed oil and gas reserves need to be left unextracted.
European export finance alliance pushes for green incentives [eventually!]
(Global Trade Review, London, 24 November 2021) Seven European countries have pledged to promote reforms and encourage green incentives in the export credit sector, but dashed campaigners’ hopes that they would axe public finance for fossil fuels more quickly than the end of 2022 deadline set at the Cop26 conference. The Export Finance for Future (E3F) coalition, initially comprising Denmark, France, Germany, the Netherlands, Spain, Sweden and the UK, held its second virtual meeting today, hosted by the Dutch government. Belgium, Finland and Italy also joined the alliance today, Dutch state secretary for finance Hans Vijlbrief told the summit following the nations’ closed-door talks. A statement expected after the meeting had not been published as of press time, but a draft seen by GTR said the E3F countries would collaborate on strategies to meeting a pledge signed by each at the Cop26 climate change summit to end public finance support for fossil fuels by the end of 2022. The E3F members provided €20bn in export finance for fossil fuel projects overseas between 2018 and 2020, according to data cited by Oil Change International, a campaign group, and ODI, a think-tank. This compares to €17bn for clean energy projects over the same period. Vijlbrief indicated that attendees at the closed-door meeting endorsed support for natural gas beyond the end of the [Cop26] 2022 deadline. “We all know gas will play a role for a couple of years in our energy supply, that’s no secret,” he said. Peder Lundquist, chief executive of EKF, Denmark’s ECA, told the summit that “logically you need some kind of transition”, pointing to natural gas as a “stable” energy source for power grids in less-developed countries that would struggle to handle a rapid shift to renewables. Deputy assistant for export finance at France’s Treasury directorate, Paul Teboul, said his government does not plan to end support for upstream gas projects until 2035.
European Commission approves €903 million Belgian trade credit reinsurance scheme
(Europa, Brussels, 18 May 2020) The European Commission has approved, under EU State aid rules, a €903 million Belgian reinsurance scheme to support the trade credit insurance market in the context of the coronavirus outbreak. Trade credit insurance protects companies supplying goods and services against the risk of non-payment by their clients. Given the economic impact of the coronavirus outbreak, the risk of insurers not being willing to maintain their insurance coverage has become higher. The Belgian reinsurance scheme, with a total budget of €903 million, ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs.
World Bank warns of Kenyan [ECA] debt distress
(Daily Nation, Nairobi, 31 October 2019) In its Kenya Economic Update for October 2019, to be released today, the World Bank notes that, “with 43% of domestic debt expected to mature within a year, the government could face challenges in rolling over such bonds in an environment of no interest rate caps, low subscription rates and over-exposure of commercial banks to these assets”. Signs of distress in paying debt came to the surface last month after it emerged that Kenya had defaulted on a Sh500 million (US$4.9m) debt owed to a Belgian export credit company for the construction of a water supply system in Mavoko. Credendo Export Credit Agency, an export credit agency of the Kingdom of Belgium, had written to the Treasury demanding the payment by November 1, accusing the government of failing to pay despite repeated reminders. As at 30th September 2019, the Star reported that most of Kenya’s bilateral debt is on concessional terms with no interest chargeable on Sh4.2 billion and an interest rate of just 2.08 per cent on Sh660.5 billion from Exim Bank of China (which constituted 74 per cent of total bilateral debt and got the relic like railway trains chugging along).
Denmark provides world’s largest export credit agency wind financing
(Global Trade Review, London, 28 September 2018) Denmark’s EKF has signed an £800mn guarantee for Hornsea 1 in what it says is the largest wind financing that any public export credit agency has ever provided. Located off the coast of Yorkshire, UK, Hornsea 1 is currently being constructed by Danish wind farm developer Orsted, formerly Dong Energy. According to EKF, it will finance suppliers such as Siemens Gamesa Renewable Energy, but also a “vast number of sub-suppliers” from Denmark. EKF has also guaranteed about EUR 100 million of the EUR 210 million European Investment Bank (EIB) facility for the Euro 700 million Northwester 2 offshore wind farm in Belgian waters.
Controversial Suez canal expansion contract signed
(Both ENDS, Amsterdam, 23 October 2014) On 18 October it was reported that the Egyptian authorities signed a contract with an international consortium of dredging companies to expand the Suez canal. The consortium includes the two main Dutch dredging companies: Royal Boskalis Westminster and Van Oord, as well as the Jan de Nul Group from Belgium and the National Marine Dredging Company (NMDC) of Abu Dhabi. The total contract values an amount of US$ 1.5 billion. ECA-cover by Atradius DSB is foreseen as part of the deal. The CEO of Boskalis – Mr. Berdowski – expressed confidence that this should not be a problem. There are serious concerns for questioning whether this project should be eligible for export credit cover from Atradius DSB. The UK’s Guardian reported in September that thousands of people have already been evicted for this project without compensation, while a total of 5.000 houses would be under threat of eviction. Evicted villagers have simply been told that they had no right to live in the area, and some persons who protested the army making this claim have already been arrested. Also, major concerns have already been raised on environmental impacts such as groundwater problems due to the absence of necessary research that should precede implementation.
Suez canal expansion contract signed
Both ENDS, 23 October 2014
On 18 October it was reported that the Egyptian authorities signed a contract with an international consortium of dredging companies to expand the Suez canal[1]. The consortium includes the two main Dutch dredging companies: Royal Boskalis Westminster and Van Oord, as well as the Jan de Nul Group from Belgium and the National Marine Dredging Company (NMDC) of Abu Dhabi. The total contract values an amount of US$ 1.5 billion. Each of the two Dutch parties involved are reportedly entitled to an equal share of US$ 375 million[2]. Apparently the consortium defeated a Chinese consortium that competed for this deal.
The expansion works include the dredging of a 75 km long new parallel canal as well as the widening and deepening of existing stretches. Thus the capacity of the canal is supposed to be doubled, allowing for an increase of revenues from the waterway of US$ 5 billion to US$ 13.5 billion. However some economists express serious doubts about these optimistic figures, as they largely depend on the cost of capital required for this investment, as well as developments in global trade. The project is a flagship project of the new Egyptian President Abdel Fattah al Sisi, who came to power last year following a military coup he led as army general. He ordered the project to be finished by August 2015, which means that all the work has to be completed in a record breaking short period. Due to this the dredging consortium is currently rushing to bring at least 17 cutting dredgers in from all over the world as quickly as they can.
The project will largely be financed by bonds that have been sold to Egyptian citizens only. Additional project finance may have been made available from Arabian Gulf States. The Dutch dredging companies taking part in the consortium are said to have negotiated an advanced payment of 15% of their share in the project to avoid payment defaults similar to previous experiences in Egypt[1]. Despite these arrangements however, also ECA-cover by Atradius DSB is foreseen as part of the deal. The CEO of Boskalis – Mr. Berdowski – expressed confidence that this should not be a problem[2].
Nevertheless one already should take note of serious concerns that provide grounds to question whether this project should at all be eligible for a cover from Atradius DSB. Early September the English newspaper The Guardian reported that already thousands of people have been evicted for this project without compensation, while a total of 5.000 houses would be under threat of eviction[3]. Evicted villagers have simply been told that they had no right to live in the area, and some persons who protested the army making this claim have been arrested already. Also major concerns have already been raised on environmental impacts such as groundwater problems due to the absence of necessary research that should precede implementation[4].
For any Cat A project Atradius DSB would be required to publish an EIA for a public consultation period of at least 30 days before deciding on the export credit insurance application. In light of the tight timeline for the project ordered by President Al Sisi, it will be worthwhile to monitor how Atradius DSB will handle the announced application for this project. It may prove another test case for how Atradius DSB will balance its mission to support Dutch companies abroad with its duty to protect the environment and the people affected by this project.
[2]http://fd.nl/economie-politiek/899049/nederlandse-baggeraars-kloppen-chinese-concurrentie-voor-tweede-suezkanaal
European Commission publishes 2012 report on member ECA actvities
(European Commission, Brussels, 7 March 2014) Regulation (EU) No 1233/2011 of the European Parliament and of the Council of 16 November 2011 on the application of certain guidelines in the field of officially supported export credits foresees that Member States shall make available to the Commission an Annual Activity Report in order to step up transparency at Union level. The Commission produces an annual review for the European Parliament based on this information and the present annual review covers the calendar year 2012. Annual Activity Reports have been received from the following Member States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Luxemburg, Netherlands, Poland, Portugal, Romania, Slovenia, Slovak Republic, Spain, Sweden and the United Kingdom.
