(BNN Bloomberg, Toronto, 7 September 2024) The UK has stepped up business in French-speaking West and Central Africa as it seeks new frontiers for its exports. UKEF was backing transactions in francophone Africa worth a cumulative £1 billion ($1.3 billion) at the end of the 2023-4 financial year, up from just £3 million in 2017-8. These countries now represents about 13% of UKEF’s portfolio on the continent. Meanwhile, China’s export credit agency Sinosure is increasingly dominant. China’s Sinosure has backed projects to support the country’s Belt and Road Initiative, a global development push that brought more than $120 billion of Chinese construction contracts and investments to Africa in its first 10 years, according to a study by the Green Finance and Development Center at Shanghai-based Fudan University. China is not bound by the same rules as the UK and France, which are members of the OECD. The OECD has in the past few years made it easier for ECAs to cover costs in the recipient’s country. Both UKEF and Bpifrance Assurance Export require at least 20% of a transaction’s value to come from businesses in their country.
ECAWatch Newsletter 9
Russian ECA decries fake news re Bangladesh nuclear power plant embezzlement
(Business Post, Dhaka, 11 September 2024) Russia has said those who produce and spread “fake news” about alleged embezzlement at Bangladesh’s Rooppur Nuclear Power Plant deliberately attempt to “discredit” this ambitious project and to “undermine” beneficial relations between Moscow and Dhaka. As of September 3, 2024, approximately US$7.8 billion out of US$11.9 billion provided by Russia to Bangladesh under state export credits for the implementation of the Rooppur NPP project, has been utilised. This amount includes transactions under two separate agreements: US$491.3 million under the first agreement dated January 15, 2013 (this credit amounted up to US$500 million, and its utilization period expired in 2017), and US$7.3 billion under the second agreement dated July 26, 2016. The full amount of the second export credit is US$11.38 billion out of which 64% has been used, and its utilisation period expires on December 31, 2024. [According to an 18 August 2024 BanglaNews article, ousted Bangladesh Prime Minister Sheikh Hasina, her son Sajeeb Wazed Joy and niece Tulip Siddiq embezzled US$5 billion from the overpriced US$12.65 billion Rooppur nuclear power plant through Malaysian banks, according to a report by Global Defense Corporation.
US Ex-Im Bank Eyes Investment in Another Mozambique LNG Project
(Bloomberg, New York, 12 September 2024) The US Export-Import Bank is considering funding a liquefied natural gas project led by Eni SpA off the coast of Mozambique, years after investing in an onshore facility to produce the fuel that’s been delayed by security issues and opposed by environmental groups. Eni’s planned Coral North floating LNG plant is listed by the official export-credit agency of the US, known as Ex-Im, as a pending project. “The financing amount would be disclosed upon final board approval,” the bank said in an emailed response to questions, declining to give a timeline for the decision.
AGA seeks to raise USD 6.5bn for major Aussie green ammonia project
(Renewables Now, 13 September 2024) Allied Green Ammonia Pty Ltd has hired Affinity Capital Group as a lead manager and strategic financial adviser to help it raise about USD 6.5 billion (EUR 5.90bn) for the development and construction of a large-scale green hydrogen and ammonia facility in the Northern Territory of Australia. The company is currently in negotiations for preapproval for about 70% of the engineering, procurement and construction contract value from the Spanish Government Export Credit Agency CESCE.
Ukranian ECA insures first investment loan against war risks
(Government of Ukraine, Kiev, 16 September 2024) The Export Credit Agency (ECA) has signed the first war risk insurance contract for an investment loan. This was announced by First Deputy Prime Minister and Minister of Economy of Ukraine Yuliia Svyrydenko during the event “Economic Policy of Ukraine. Recovery During the War” in Kyiv on 16 September.
UKEF pushes Titanic builder Harland & Wolff into administration
(Splash 247, Singapore, 17 September 2024) Harland & Wolff, the owner of the Belfast shipyard that built the Titanic, has announced that it will be entering into administration this week after failing to find new funding following the UKEF rejection of the company’s request for a £200m facility. The company said its request for a £200 million (US$260 million) loan from the UK government’s export credit agency UK Export Finance had been had been rejected, leaving it in financial trouble.
The real effects of trade financing by export credit agencies
(Centre for Economic Policy Research, London, 9 February 2024) Trade finance subsidies, usually provided by export credit agencies, are the predominant tool of industrial policy. This column discusses the effect of the effective shutdown of the Export–Import Bank of the US (EXIM) from 2015—2019 on firm outcomes. It finds that firms which previously relied on EXIM support saw a 18% drop in sales after the agency closed, driven by a reduction in exports. Firms affected by the shutdown also laid off employees and curtailed investment. Overall, export credit subsidies can boost exports even in countries with well-developed financial markets, without necessarily leading to a misallocation of resources.
Britain plans to reopen Cuba export credit coverage
(Journal of Commerce, London, 26 September 2024) Cuba and Britain have agreed to reschedule $27.7 million of short-term debt owed by the communist-ruled island, opening the way for London to resume medium-term export credit cover to Havana.Britain’s government-funded Export Credit Guarantee Department, which withdrew medium-term cover in 1983, said the deal was signed in London last week with Cuban central bank President Francisco Soberon. Cuba, which has more than $11 billion in foreign debt, already has such cover with France, Spain and Italy. British businesses have long complained that this put them at a disadvantage to their European competitors. UK Export Finance and the Government of Cuba are working together to identify trade opportunities, particularly related to renewable energy and tourism infrastructure. A number of UK companies have already expressed an interest in potential projects on the island. UKEF can consider short-term (less than 2 years) transactions where payments are secured by a non-confirmed Irrevocable Letter of Credit,
Rich Nations Running Out of Time to Curb Oil and Gas Funding
(Bloomberg, 17 September 2024) A group of developed nations will make a new push to resolve differences amid fading prospects for a deal to restrict funding of foreign oil and gas projects by their export credit agencies. Restricting export credit agencies is seen as a potentially important tool in curbing the flow of financing to fossil fuels projects. Group of 20 nations offered more than $30 billion for such ventures in 2022, led by Canada and South Korea, according to data compiled by Oil Change International, a climate advocacy group.
Western nations join forces to break China’s grip on critical minerals
(Financial Times, New York, 23 September 2024) Coalition of 14 governments announces financing network for projects to provide raw materials required by tech industry. Western nations are directing their development finance and export credit agencies to work with private industry to support critical minerals projects, in a drive to break China’s chokehold over a sector that is essential for high-tech industries. The Minerals Security Partnership, a coalition of 14 nations and the European Commission, will unveil a new financing network at an event in New York on Monday as they try to ramp up international collaboration and pledge financial support for a huge nickel project in Tanzania, backed by mining company BHP.
