(Odessa Journal, Odessa, 13 December 2022) French business is interested in investing in Ukraine and is ready to participate in its early reconstruction announced First Vice Prime Minister – Minister of Economy of Ukraine, Yuliya Svyridenko, during a live broadcast from Paris on the air of the National Telethon. “We discussed what tools we, as the Government, can use to ensure that French business enters the Ukrainian market and develops Ukraine even before our victory… We offer export credit agencies that provide insurance services for export operations to expand their services to insurance of investment activities and to insure their companies entering Ukraine. We have a list of investment projects and an understanding of their prioritization, and from their side, we have financing and companies ready to invest in Ukraine. And for us, the issue of military risk insurance is important. To help attract investments without waiting for the end of the war. War is not an obstacle to investment. This is a difficult period for us, but we will get through it,” Yulia Svyridenko assured.
ECAWatch Newsletter 12
Who watches Czech state’s ECA obligations to big businesses?
(Paradise News, Calabar Nigeria, 10 December 2022) Czech state-owned ECA EGAP has obtained a CZK 2 billion (US$88.6M) loan from the Czech Republic’s COVID aid program for Czech steelmaker Liberty Ostrava, which is closely linked to Greensil, a company embroiled in corruption scandal. The Czech government’s COVID-19 aid to large polluters like Liberty Steel Ostrava, which is on the verge of bankruptcy, continues to be a cause for concern.The case is another illustration of the shortage of transparency and accountability in export credit agencies (ECAs). The COVID Plus program in the Czech Republic will provide hundreds of billions of dollars to large exporters, but there is no oversight or regulation. It is the job of the state to explain which projects it backs and give reasons for doing so, but EGAP remains mum on its questionable investments.
Legal challenge over UK funding of Mozambique gas project goes to appeal court
(Drill or Drop, London, 6 December 2022) Government approval of $1.5bn financing for a liquified natural gas project in Mozambique has been challenged at the Court of Appeal this morning (Tuesday 5 December 2022). A year ago, a case brought by Friends of the Earth ended in deadlock, when two High Court judges disagreed on the verdict. The challenge was dismissed so that it could be heard again in the appeal court. Friends of the Earth will argue at the new hearing that the financing, through the government’s export credit agency, UK Export Finance (UKEF), was unlawful. It was permitted, the environmental organisation will say, after the project was incorrectly judged to be compatible with the Paris Agreement on climate change. Friends of the Earth has estimated that the facility would emit 4.5bn tonnes of greenhouse gases over its lifetime – more than the combined annual emissions of the 27 EU countries. The government has until March 2023 to revise its net zero strategy after losing a challenge by Friends of the Earth, ClientEarth and the Good Law Project. The high court ruled that the government should outline exactly how the net zero policies will achieve emissions targets. A decision is due early in 2023.
Australia in talks to help PNG buy $1.1 bln PNG LNG stake
(Reuters, Sydney. 6 December 2022) Papua New Guinea’s state-owned Kumul Petroleum is in talks with Australia’s export credit agency to help fund a $1.1-billion acquisition of a 5% stake in the PNG LNG project from Santos Ltd (STO.AX). Santos announced in September that Kumul had made a binding offer to buy a 5% stake in PNG LNG from the company for $1.1 billion, subject to the other joint venture partners, which include ExxonMobil Corp and Japan’s JX Holdings Inc, waiving their pre-emptive rights to match the offer.
South African exporters assured Export Credit Insurance Corporation now has expanded cover
(Mail & Guardian, Johannesburg, 1 December 2022) African countries’ borders are becoming more porous, allowing for greater movement of goods and services via the African Continental Free Trade Area (AfCFTA) agreement, but by its nature this comes with a lot of risk. This is where export insurance comes in: to protect an exporter against a foreign buyer’s failure to pay for goods or services for political or commercial reasons. South African companies can count themselves lucky to have export insurance available to them through the Export Credit Insurance Corporation (ECIC), which is an official export credit agency, wholly owned by the Department of Trade, Industry and Competition. The AfCFTA is the perfect platform for cross-border trade and a number of opportunities exist. Substantial reduction of tariff and non-tariff barriers that will result from the implementation of AfCFTA will indeed increase intra-Africa trade and promote regional economic development. It is unacceptable that Africa, the second largest continental landmass after Asia, with all the resources, accounts for just 4.4% of world trade.
What ETMs can and can’t do for coal retirements
(TXF, London, 30 November 2022) The evolving science of coal plant retirement financing has had a busy couple of weeks with the Asia Development Bank signing a 14 November memorandum of understanding re potential early retirement of the Cirebon Electric Power for unit 1 of the 1,660MW Cirebon coal-fired plant, using the ADB’s Energy Transition Mechanism (ETM). The day after, on the sidelines of the same G20 summit where the Cirebon MOU was signed, the US, Indonesia and a raft of other developed countries launched the Just Energy Transition Partnership (JETP), a $20 billion combination of grants, concessional loans, commercial loans, ECA guarantees, and private investment. The programme will cover a big expansion in renewables, and the retirement of coal capacity whose emissions cannot be rebated. Aside from the summit-friendly but content-light announcements, there was further progress on the first coal retirement financing in Asia for a 244MW Philippino coal plant.
Jaguar Land Rover lands UKEF-backed export loan
(Institute of Export and International Trade, London, 22 December 2022) In its end of 2022 report, the IEIT notes that UK Export Finance (UKEF) is backing 80% (£500m) of a loan by 12 banks that will support the research, development and export of the next range of battery-powered Range Rovers. Jaguar Land Rover is one of the UK’s largest exporters and employs more than 28,000 staff in the UK. In 2020-21, the company sold 439,588 vehicles in 127 countries, with about 80% of its sales to export markets outside the UK. UKEF backing worth £600 million will also help Ford to expand its electric vehicle production line.
Germany reveals considation of 10 large international fossil fuel projects worth EUR 1 billion, despite major climate pledge
(Oil Change International, Washington, 7 December 2022) A German government State Secretary has revealed a pipeline of fossil fuel projects that shows a lack of seriousness about keeping Germany’s climate promise. The Government stated that it “currently has ten individual applications for cover under review for the granting of an export credit guarantee for supplies and services to Brazil, Iraq, Uzbekistan, the Dominican Republic and Cuba with a total volume of around one billion euros, which are connected with fossil energy projects.” Despite climate rhetoric, Germany still funding more fossil fuels than renewable energy and provides more government-backed international finance for fossil fuels than Saudi Arabia or Russia. Regine Richter, Energy and Finance Campaigner at Urgewald, said: “The German government needs to understand that you can’t say you favour climate protection and at the same time support massive fossil fuel projects. While the German government is tight-lipped about KfW loan applications, the applications for export finance alone add up to more than €1 billion for fossil fuel projects. This must end if we are to stand a chance to stay within the 1.5°C temperature limit.”
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.
Chinese ECA sees underwriting growth of 9%
(Xinhua, Beijing, 26 December 2022) China’s only policy-oriented insurer specializing in export credit insurance reported steady business growth in the first 11 months of 2022. The China Export & Credit Insurance Corporation, or SINOSURE, served about 179,000 clients in the January-November period, an increase of 14% year on year. During the period, the company handled underwriting for insured businesses worth a total of US$817.93 billion, up 8.6% year on year. SINOSURE is a state-funded and policy-oriented insurance company that promotes China’s foreign economic and trade development and cooperation. It was officially launched and put into operation in 2001, and its service network now covers the whole country
