(Economic Times, Delhi, 24 October 2024) The Export Credit Agencies (ECA) of Germany (Euler Hermes), Austria (OeKB) and Switzerland (Swiss Export Risk Insurance SERV), together with the Swiss Business Hub India and Switzerland Global Enterprise, on Thursday reached out to Indian companies, banks and government institutions for opportunities for investment and cooperation.
Switzerland
Switzerland still handing out fossil fuel finance like candy
(Swiss Climate Rambles, Berkely, 23 September 2024) According to its own website, the Swiss government’s export risk insurance agency SERV (Swiss Export Risk Insurance) has approved insurance for 7 gas projects with a total delivery value of CHF 3,375 million (or US$3,967 million at the current exchange rate) since the CETP took effect. The fossil fuel projects which SERV insured in 2023 and 2024 are listed in the following table. (Their delivery value may be larger than the value insured by SERV.) Switzerland is also the only country which has explicitly weakened its CETP policy. In March 2023, SERV pledged to end all its fossil fuel finance, with exemptions only for projects in line with the Paris Agreement’s 1.5°C goal. In July 2024, Oil Change International revealed that the agency had quietly watered down its policy by allowing SERV to fund any gas project it considers is in the “economic, foreign, trade & development policy interests of Switzerland”.
Swiss ECA faces backlash after climate policy U-turn
(Global Trade Review, London, 17 July 2024) Climate campaigners have accused Switzerland’s export credit agency (ECA) of “watering down” its climate commitments, after it scrapped a pledge to end all support for the fossil fuel sector. Swiss Export Risk Insurance (Serv) was one of numerous public finance institutions that pledged to end direct support for the unabated fossil fuel energy sector by the end of 2022, part of a landmark declaration on climate change agreed at the Cop26 summit in Glasgow. But in an updated policy finalised in May this year, Serv has removed that commitment. Support is still unavailable for coal or oil, or for upstream projects, but midstream gas projects are no longer prohibited. Even if a project does not meet Paris Agreement goals, Serv can still offer insurance if it is deemed in the “economic, foreign, trade and development policy interests of Switzerland”, the policy states.
Oil Trader Gunvor to Pay More Than $660 Million to Resolve Bribe Cases
(Yahoo Finance, New York, 1 March 2024) Gunvor Group Ltd., one of the world’s top oil traders, will pay more than $660 million to resolve US and Swiss charges that the company paid bribes to Ecuadorian government officials for contracts. The information released by the US is a reminder of the seedy deals made in the not-too-distant-past by some of the biggest firms in commodity trading, which have made billions of dollars in profits on energy market volatility stemming from the Covid-19 pandemic and then the invasion of Ukraine. A shortage of key resources has also seen these companies strengthen ties with governments around the world — just a few months ago, Italy’s export credit agency guaranteed a €400 million ($433 million) loan to Gunvor in return for supplying gas to the country.
UKEF is not building a multimillion pound railway line in Turkey
(Full Fact, London, 26 July 2023) Earlier this week Greater Manchester mayor Andy Burnham tweeted a screenshot of a UK government press release with the headline “UK announces £680m for new high-speed electric railway in Turkey”. Alongside the screenshot, Mr Burnham tweeted “So we can’t afford to keep our own ticket offices open – but we can afford to build a new line in Turkey?” Mr Burnham’s suggestion that the UK is financing a new railway line in Turkey is misleading—the £680 million figure used in the government press release refers to a loan provided by three banks (J.P. Morgan, ING Bank and BNP Paribas) which has been underwritten by the UK government’s export credit agency. The Italian, Austrian and Swiss export credit agencies are also providing reinsurance.
Canada and New Zealand map out pledges to axe ECA fossil fuel support
(Global Trade Review, London, 14 December 2022) Canada and New Zealand have mapped out how they will put into action pledges to scrap ECA support for fossil fuel projects, ahead of an end-of-year deadline. At last year’s Cop26 summit in Glasgow, thirty-nine countries vowed to end public finance backing for fossil fuels by the end of 2022, which theoretically bars ECAs and export finance institutions from providing fresh backing for such projects from January 1, 2023. Canada was the second-biggest public financier of fossil fuel projects in the G20 between 2019 and 2021. On the same day, EDC’s fellow ECA New Zealand Export Credit (NZEC) outlined a similar policy to cement its Cop26 commitment, including an end to support for fossil fuel exploration, extraction, transportation, storage and refining, as well as power plants and supporting infrastructure and services. Even for a party which is “in the fossil fuel energy sector” but carrying out an unrelated transaction, “applications may be considered only where that party has a documented and realistic transition plan consistent with a 1.5°C warming limit and the goals of the Paris Agreement [on combating climate change],” the NZEC policy says. The release of NZEC’s policy means there are only five governments that are yet to outline how they will meet their commitments to axing public finance for fossil fuels by the end of this year, according to Oil Change International: Germany, Italy, Portugal, Spain and Switzerland. Of these, Germany, Italy and Spain agreed earlier this year to publicise their plans to wind down ECA support for fossil fuels as part of the Export Finance for Future (E3F) alliance, but so far have not.
Europe’s German-speaking ECAs ink collaboration pact
(Global Trade Review, London, 19 June 2019) Hermes, OeKB and Serv – the export credit agencies (ECAs) of Germany, Austria and Switzerland respectively – have agreed to join forces to improve opportunities for their exporters in the face of increased competition from Asia. While the statement doesn’t call out China by name, Chinese export credits have long been seen as a competitive threat by Europe’s ECAs. China is not a member of the OECD and is therefore not obliged to comply with the OECD guidelines that stipulate the financial terms and conditions that its members may offer, leaving scope for an unfair advantage for Chinese exporters.
SNC-Lavalin insider’s bribery allegations spark EDC probe
(CBC, Toronto, 3 April 2019) Export Development Canada has hired outside legal counsel to review some of its dealings with SNC-Lavalin. The review comes after a company insider told CBC News the engineering giant secured billions in loans from the Crown agency over the years, some of which he alleges was intended to pay bribes. EDC has denied knowledge of any improper payments, but last Friday said it is taking a closer look at a 2011 deal with SNC-Lavalin involving a $250-million project to refurbish the Matala hydroelectric dam in Angola. EDC has backed SNC-Lavalin projects in 19 countries since 1995. In 2012 the head of SNC-Lavalin’s construction division was arrested in Switzerland for bribery in Libya. The sheer size of “technical fees” which could total as much as 10% of a project’s overall budget should have raised flags. In 2013 the CBC and the Globe and Mail exposed secret payments for projects in Africa, India, Cambodia and Kazakhstan.
Pakistan’s Mobilink tests export credit guarantee for sukuk
(Reuters, 13 January 2015) Pakistan Mobile Communications (Mobilink), the country’s largest telecommunications operator, plans to raise 6.9 billion rupees ($68.6 million) via Islamic bonds this quarter, Pakistan Credit Rating Agency said in a statement. The sukuk, which will be listed, have been rated AA by the rating agency and will include a partial credit guarantee of 966 million rupees. The sukuk would help fund the network expansion of Mobilink, a wholly owned subsidiary of Global Telecom Holding, which is in turn majority-owned by Russia’s VimpelCom. The credit guarantee will be extended by Mauritius-based GuarantCo, a specialised financial guarantor indirectly owned by the development agencies of Britain, Switzerland, Sweden and the Netherlands.
Swiss and Chinese ECAs asked to fund bloated Bangladesh power plant costs
(The Finacial Express, Dhaka, 29 November 2014) Nearly 40 per cent of the Tk 25.19 billion (US$323.4 M) sought for a proposed power sector project are set to be spent for less-important matters, including purchase of vehicles and foreign training, officials said Wednesday. Such huge spending of the project money on ancillary things has given rise to questions about proper cost estimation and economic viability of the project, they said… Power Division officials said the PDB signed deal with Swiss company Alstom and Chinese company CMC on January 12 this year for the re-powering of the Ghorashal 3rd power unit… The PDB has also selected the Swiss Export Credit Agency (SERV) and the China Export and Credit Insurance Corporation (SINOSURE) for borrowing Tk 20.19 billion ($259.75 million) buyer’s credits.
